55% of Nifty 500 stocks in downtrend: More correction expected?
What's the story
The 5% fall in the Nifty index last week has dragged nearly 55% of NSE 500 stocks below their long-term trend indicator, the 200-day moving average (DMA). This fall usually indicates a downward trend for an index or stock. On Friday, the Nifty ended below the 200-DMA, while the broader Nifty 500 index ended just above this important technical level.
Sell-off repercussions
Market impact of recent sell-off
Out of the 492 stocks on the NSE 500 with available 200 DMA data, 268 are now trading below it. The recent market sell-off has been more brutal than the entire month of October's weakness, when less than 5% of NSE 500 stocks traded under their respective 200-DMAs. This shift indicates a potential change in market dynamics and investor sentiment.
Stock performance
Major stocks fall below their 200-DMAs
Among the 92 stocks having a market cap of more than ₹1 lakh crore, 52 have slipped below their 200-DMAs. These include heavyweights such as Reliance Industries, SBI, LIC, Hindustan Unilever, Bajaj Finance, Kotak Bank, Maruti Suzuki and Axis Bank. However, some stocks have managed to stay strong. Infosys, HCL Technologies, Wipro, Trent, Vedanta, Tech Mahindra, Divi's Laboratories and Indian Hotels are still trading 10% above their respective 200-DMAs.