SENTIMENT INDICATORS

200-DMA INDICATOR  [EasyDNNnews:PaidContentStart]

The 200-day moving average (DMA), a widely tracked gauge of long-term market breadth, signalled a sharp deterioration in the Nifty 50's internal strength between January 14 and January 21, 2026. The percentage of constituents trading above their 200-DMA dropped substantially from 64 per cent to 48 per cent, while those below the long-term moving aver age rose from 36 to 52. With the Nifty 50 index down 2 per cent over the same period, the data suggests the decline was broad-based, rather than being led by just a few heavyweights. It underscores that that a well-established uptrend is in dan ger now. Stock-level action adds to the cautious tone.

Several large and liquid names moved below the 200-DMA during the week, including ADANIPORTS, ETERNAL, GRASIM, ICICIBank, LT, Reliance, SUNPHARMA and WIPRO. The spread across banking, industrials, energy, pharma and IT indicates risk-off behaviour is surfacing across sectors, and not just in one pocket of the market. When frontline stocks lose long-term trend support, it often signals fading conviction and a more defensive market environment. Overall, the breadth shift calls for higher selec tivity and disciplined positioning, favouring fundamentally strong stocks holding above the 200-DMA, while treating recent breakdowns with caution until stability returns. 

SECTORAL SENTIMENT INDICATOR 

The sectoral 200-day moving average (200-DMA) breadth shows that the market is no longer in a “flat and calm” consolidation mode. Instead, the internal structure is turning decidedly weaker, with a majority of Nifty sectoral indices seeing a drop in the share of stocks holding above their long term moving average. The loss of participation was most visible in leadership-heavy pockets. Nifty IT and Nifty Private Bank posted the steepest deterioration, with breadth slipping by 20 percentage points each, highlighting waning conviction in two segments. Nifty Bank also weakened sharply, down 16.67 points, suggesting that the broader financial space is struggling to absorb selling pressure. Even defensive comfort zones didn’t hold up well. Nifty Pharma, also saw 20 percentage points deterioration, while Nifty FMCG dropped 13.33 percentage points, indicating that investors were trimming exposure even in traditionally defensive sectors.



Nifty Financial Services declined by 10 percentage points, while Nifty PSU Bank and Nifty Auto witnessed relatively milder slippages of 8.33 and 6.67 points, respectively. The only pockets that held their ground were Nifty Metal and Nifty Media, where breadth was unchanged. Meanwhile, Nifty Realty remained the weakest link, with participation thinning further (down 10 percentage points), with this 90 per cent of constituents of Nifty Realty are below the key moving average. Overall, the sectoral 200-DMA picture suggests a market where risk appetite is narrowing, and a selective, disciplined approach is far more sensible than broad-based buying. 

Indicator To Gauge Internal Strength 

This indicator captures the internal strength of the broader market by tracking how many Nifty 500 stocks are registering fresh 52-week highs versus those slipping to new 52-week lows. In a healthy market, new highs expand while new lows remain contained, signalling broad participation. A reversal in this balance often points to rising internal stress, even before headline indices weaken materially. Between January 14 and January 21, 2026, the breadth picture deteriorated decisively. The number of Nifty 500 stocks hitting new 52-week highs fell from 4 to zero, indicating a complete absence of upside leadership. At the same time, new 52-week lows surged from 0 to 23, highlighting a sharp sell-off. This shift coincided with a 2.73 per cent decline in the Nifty 500, which slipped from 23,475.9 to 22,835.2, confirming that weakness was not confined to a few heavyweights.



The sharp skew between falling highs and rising lows suggests that selling pressure has become broad-based and stock-specific, with investors exiting weaker names more aggressively. Such a setup reflects risk aversion, shrinking participation and a fragile internal market structure. For stability to return, the market would need to see a meaningful contraction in new lows, followed by a gradual re-emergence of new highs, signalling improving leadership and healthier participation.