SENTIMENT INDICATORS

200-DMA INDICATOR  [EasyDNNnews:PaidContentStart]

The 200-day moving average setup improved modestly between July 1, 2026, and July 8, 2026, pointing to a slight recovery in market breadth despite index weakness. The percentage of Nifty 50 stocks trading above their 200-DMA increased from 40 per cent to 44 per cent, while the share of stocks trading below this long-term average eased from 60 per cent to 56 per cent. During the same period, the Nifty declined by 0.52 per cent, suggesting that the index remained under pressure, but partici pation improved marginally. The reading still remains below the halfway mark, showing that the broader trend recovery is yet to gain decisive strength. This keeps the setup cautious, as more than half of the index constituents continue to trade below their long-term trend indicator. At the stock level, Bajaj Finserv, Bharti Airtel, and Eicher Motors crossed above their 200-DMA, offering positive trend signals. Larsen & Toubro slipped below its 200-DMA, indicating weakness in one key index constituent. 

Overall, the latest reading points to a cautiously improving breadth setup. For a stronger recovery signal, the percentage of stocks above the 200-DMA must move back above 50 per cent, while fresh breakdowns should remain contained. 

SECTORAL SENTIMENT INDICATOR 

The sectoral 200-DMA breadth as of July 8, 2026, continues to reflect a selective market participation setup, with strength concentrated in a few pockets, while weakness persists across several sectors. Nifty Pharma remains the clear leader, with 95 per cent of its constituents trading above the 200-DMA, and the reading stayed unchanged from the previous week. Nifty Private Bank and Nifty Realty also continue to show healthy breadth, with 80 per cent of their stocks holding above the long-term trend line, again remaining steady on a week-on week basis. Nifty Auto delivered the strongest improvement in the latest reading, rising to 66.67 per cent above the 200 DMA after a 13.33 percentage point increase. This keeps the sector comfortably above the halfway mark and indicates better participation within the auto space. Nifty Bank remained neutral at 50 per cent, suggesting stable but not decisive breadth. However, Nifty Financial Services weakened, with the percentage of stocks above the 200-DMA falling to 35 per cent after a 10 percentage point decline, keeping the sector below the recovery threshold. On the weaker side, Nifty PSU Bank deteriorated further, with stocks above the 200-DMA slipping to 8.33 per cent after an 8.33 percentage point fall. 

Nifty FMCG also weakened, dropping to 26.67 per cent after a 6.67 percentage point decline. This shows that defensive participation has also softened. The weakest pockets remain Nifty PSU Bank at 8.33 per cent and Nifty IT and Nifty Metal at 20 per cent each. Nifty Media stayed unchanged at 40 per cent, reflecting limited traction. Overall, the latest reading still points to a narrow and selective sectoral breadth setup, led by Pharma, Private Bank, Realty, and strengthening Auto. For broader confirmation, more sectors need to move and sustain above the 50 per cent mark. 

Indicator To Gauge Internal Strength 

This indicator captures the real breadth of the broader market by comparing the number of Nifty 500 stocks making fresh 52-week highs with those slipping to fresh 52-week lows. A strong market generally shows consistent expansion in new highs, with few counters entering new-low territory. When both highs and lows rise together, it reflects uneven participation and stock-specific divergence. As per the latest reading shown in the chart, the Nifty 500 declined from 23,111.7 on July 1, 2026, to 22,908.1 on July 8, 2026, marking a fall of 0.88 per cent. Over the same period, the number of stocks touching fresh 52-week highs dropped sharply from 9 to 1, while fresh 52-week lows also cooled from 7 to 1. This indicates that the broader market has lost upside momentum compared with the previous reading. The sharp fall in fresh 52-week highs suggests that leadership has narrowed and fewer stocks are now able to break into new high territory. At the same time, the drop in fresh 52-week lows is a relief, as selling pressure is not spreading aggressively across the broader market. Overall, the latest setup points to a soft but not deeply weak internal market structure. The decline in new highs keeps the signal cautious, while the reduction in new lows prevents it from turning negative. For strength to return, fresh highs need to expand again, with lows remaining contained.

 

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

To read the entire article, you must be a FNI Weekly Subscriber.

[EasyDNNnews:UnPaidContentEnd]