Sensex @ its 200 day DMA: Markets to turn bullish for long term?

Sensex closed at 25816 levels on 18th of April trading at a kissing distance of its 200 day DMA (Daily Moving Average). Indian markets are shut on Tuesday on the occasion of Mahavir Jayanti. Asian markets are trading in green with Nikkei climbing almost 3.5 percent on Tuesday’s trade. With Crude oil prices stabilising after a steep fall and relatively lower Japanese Yen compared to dollar, the Asian markets are expected to trade higher on Tuesday. In view of positive global backdrop on equity markets, Indian markets may trade firm on Wednesday and there is good chance that Sensex may close above its 200 day DMA.

Whenever the price of the underlying starts trading above a long time frame moving average such as 200 DMA, it generally indicates a shift in long term trend. The 200 day DMA is considered to be a good measure of a trading year, 100 day DMA for half a year, 50 day DMA for a quarter of a year and 20 day DMA for a month.
In case Sensex moves up on Wednesday and settles above its 200 day DMA levels it will bring cheers to lot of investors and traders with long positions in the market.

Out of 30 stocks which are the constituents of SENSEX, only 12 stocks are trading below their 200 day DMA. Especially the Pharma stocks as a bunch are trading below their 200 day DMA. Stocks like CIPLA, Sun Pharma, Lupin, and Dr. Reddy’s all are trading below their 200 day DMA. It will be interesting if Pharma stocks start inching up along with the broader market based on quality earnings. Other Index stocks trading below their 200 day DMA are Adani Ports, BHEL, HDFC, L&T, Axis Bank, Coal India, Maruti Suzuki India and State Bank of India.