25 Sep , 2021 By : monika singh
Mumbai: A long-term trend indicator in the market is showing majority of India's bluechips are in the bullish zone. About 88% of the Nifty stocks are trading above their 200-day moving average, a sign which highlights the strength of the market. Analysts however warn this is also a sign of caution given the uninterrupted run in the stock market.
Out of the 50 Nifty stocks, 28 have hit record highs in or after August.
"Momentum is quite strong, so most of the stocks are above 200-DMA. This shows strength is there in the market and one should play the trend with caution and strict stop-losses," said Abhilash Pagaria, AVP, Edelweiss Alternative Research.
When a stock trades above 200-DMA, it points to a bullish trend and vice versa. 200-DMA is considered a long-term moving average as it signifies a stock's trend over the last one year. A year has roughly 200 trading sessions. Some traders however treat 200-DMA as a contrarian indicator too. The number of stocks above 200-DMA within Nifty has been consistently above 85% since November 2020.
Currently, finance and technology companies are steeply higher than their 200-DMA.
Bajaj Finserv, Bajaj Finance, Tech Mahindra, HCL Technologies, Wipro and Hindalco Industries are up 35-61% from their 200-day moving averages.
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