GMM Pfaudler, IDBI Bank: 14 Nifty500 stocks have surged above their 200-DMA

When the Nifty 50 claimed a new all-time high of 15,431 levels recently, the total number of Nifty 500 stocks trading above 200-days moving average (DMA) were 454. However, during the recent correction of nearly 5 per cent, the total number of stocks trading above 200-DMA actually increased to 459. The Nifty 50 is currently hovering around 15,000 levels with an uncertain trend. Nevertheless, the increase in number of stocks that are trading above this key technical parameter suggests that the market has moved away from a meaningful rise in the frontline indices to stock-specific action.

If a stock breaches its 200-DMA on the downside, it is an indication of underlying weakness. On the contrary, a move above the 200-DMA usually brings back such counters in investors' radar with the stocks likely to gain momentum. For long-term investors, the simple 200-day moving average (DMA) provides a broad outlook of the trend. Analysts prefer stocks trading above the 200-DMA, since they tend to perform better in a trending market. Risk management, hence, becomes comparatively easier with allocation of stocks trading well above their respective 200-DMA levels.

The recent churn in the market has seen 14 stocks surge above 200-DMA. The list includes GMM Pfaudler Limited, Gujarat Alkalies and Chemicals Limited, Heritage Foods Limited, IDBI Bank Limited, Petronet LNG Limited, RITES Limited, Sanofi India Limited, Swaraj Engines Limited and WABCO India Limited. On the other hand, Biocon Limited, Dr. Reddy's Laboratories Limited, Dhanuka Agritech Limited, Godrej Consumer Products Limited, Hindustan Unilever Limited, Nestle India Limited are among the 9 counters that have slipped below their respective 200-DMA.

 

Nifty 500
Source:spidersoftware