SENTIMENT INDICATORS

200-DMA INDICATOR  [EasyDNNnews:PaidContentStart]

The 200-day moving average (DMA), a widely tracked gauge of long-term market breadth, reflected a sharp improvement in the Nifty 50’s internal strength over the past week. Between December 31, 2025, and January 7, 2026, the number of Nifty constituents trading above their 200-DMA rose decisively from 62 to 72, while those trading below the long-term trendline declined from 38 to 28. This broad based improvement in participation coincided with a 0.61 per cent rise in the Nifty, indicating that the index-level recovery was supported by strengthening internal breadth rather than being driven by a narrow set of heavyweight stocks. Stock-level movements reinforce this constructive undertone. Apollo Hospitals, HDFC Life, ICICI Bank, NTPC, TCS, and UltraTech Cement closed above their respective 200 DMAs during the week, signalling expanding leadership across financials, defensives, infrastructure, and consumption linked names. These crossovers suggest that buying interest is spreading across multiple segments rather than remaining confined to a single pocket. On the downside, Dr Reddy’s Laboratories slipped below its 200-DMA, pointing to stock specific weakness within the pharmaceutical space. Overall, the rising proportion of stocks reclaiming long-term trend support reflects improving internal participation. From an investor’s perspective, such breadth expansion often marks a transition from consolidation to a more sustainable recovery phase, provided these gains are maintained in the coming sessions.



SECTORAL SENTIMENT INDICATOR

The sectoral 200-day moving average (200-DMA) indicator for January 7, 2026, highlights a clear improvement in internal breadth, with leadership expanding across multiple sectors and reduced signs of stress. Financials emerged as the strongest pocket. Nifty Bank recorded an 8.33 per cent rise in the proportion of stocks trading above the 200-DMA, indicating strengthening participation among frontline lenders. Nifty Financial Services showed a sharp 25 per cent improvement, reflecting broad based recovery across non-bank financial stocks. Nifty Private Bank also registered a 10 per cent increase, while Nifty PSU Bank improved by 8.33 per cent, pointing to renewed interest across public sector lenders.Cyclical sectors presented a mixed picture. Nifty Auto and Nifty Metal recorded no change on a week-on-week basis, suggesting consolidation after recent moves rather than fresh accumulation or breakdown. Nifty IT also remained unchanged, indicating that the sector continues to move sideways without clear leadership emerging. Real Estate stocks stood out positively. Nifty Realty witnessed a strong 30 per cent increase in stocks trading above the 200-DMA, signalling a sharp recovery in participation and a reclaiming of long-term trend support after recent volatility. Nifty FMCG remained stable, reflecting continued defensive positioning, while Nifty Pharma improved by 10 per cent, indicating selective accumulation within healthcare names. Nifty Media showed no change and continues to remain a structurally weaker segment. Overall, the sectoral breadth picture suggests that leadership is broadening meaningfully, led by financials and supported by a strong rebound in Realty. With defensives stable and cyclicals consolidating, the market environment appears increasingly selective but constructive, favouring sectors where long-term trend support is being decisively reclaimed.

Indicator To Gauge Internal Strength

The internal market strength indicator, which tracks the number of Nifty 500 stocks hitting fresh 52-week highs versus those recording new 52-week lows, points to a gradual but clear improvement in overall participation. Between December 31, 2025, and January 7, 2026, the number of stocks recording new 52-week highs increased from 2 to 4, while new 52-week lows remained unchanged at zero. This combination reflects expanding upside participation without any corresponding increase in downside stress. During the same period, the Nifty 500 index advanced by 0.61 per cent, rising from 23,871.55 to 24,016.60. The improvement in index levels, along with a rising count of new highs and an absence of new lows, suggests a healthier internal setup compared to recent weeks. Although the absolute number of new highs remains modest, the improving trend indicates that buying interest is slowly broadening beyond a narrow group of stocks. Overall, the internal market structure has turned Indicator to gauge internal strength more constructive.

For this improvement to evolve into a durable bullish phase, the market would need to see a sustained expansion in new 52-week highs while continuing to contain new lows. Until then, the broader setup remains favourable for a selective, risk-managed approach focused on stocks and sectors demonstrating consistent relative strength.

(Closing price as of January 07, 2026) 

*LEGEND: ▪️ DMA - Daily Moving Average. ▪️ MACD - Moving Average Convergence Divergence ▪️ RMI - Relative Momentum Index ▪️ ROC - Rate of Change ▪️ RSI - Relative Strength Index

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