HDFC Bank, ACC, Tata Steel: Over half of NSE 500 stocks slip below 200-DMA

The sharp fall in Indian equity markets over the past few weeks has seen 281 stocks, or 56 per cent of the stock that comprise the NSE 500 index, slip below their 200-day moving average (DMA). If the weak sentiment persists, they can slip further, which should be a cause for concern, analysts said.
 
Technically, traders and investors view the 200-day moving average (DMA) as an indicator to decide on their investment strategy. Although this indicator is a simple mean of 200-sessions, the existence of any stock above and below it exhibits the underneath strength and momentum. Any stock trading above 200-DMA is seen positively by traders and investors as it is likely to move up in the sessions ahead and vice-versa. To better understand the market direction in the days ahead, traders and investors consider the 200-DMA as a more reliable average than its peers 50-DMA and 100-DMA.
 
Among the prominent ones, ACC, HDFC Bank, SBI Life Insurance Company, REC, Tata Steel, UPL, and Zee Entertainment Enterprises have already begun to lose the upward bias amid the market weakness, charts indicate. ASF India, Bharat Forge, Bharat Heavy Electricals, Finolex Cables, GAIL (India), and Gujarat Pipavav Port that were making an effort to conquer this 200-DMA since the past few sessions are also losing strength and can slip further, charts indicate.
 
“Indian markets witnessed a sharp fall on the back of rising geopolitical tension between Russia and Ukraine. All this is triggering a rise in crude oil prices as well, which is another headwind for the Indian equity markets. Technically, the Nifty is trading near a critical demand zone of 17,000-16800, and the 'buy on dip' texture will hold till the index trades above the 16,800 level which also is its 200-DMA. That said, it will face multiple resistances at 17300, 17500 and 17,650 levels. A fall below 16,800 levels may make things ugly,” said Parth Nyati, Founder, Tradingo.
 

Rising geopolitical concerns over Russia and Ukraine, possibility of a faster-than-expected rise in interest rates by the global central banks, especially the US Federal Reserve (US Fed) and rising oil prices has dented sentiment over the past few weeks. All this, analysts believe, will keep the markets choppy over the next few sessions. The Sensex faces resistance at 56,400 – 57,900 levels, charts suggest.
 
“Sentiment has turned very negative from a short-term perspective, with the heightened tension over the Ukraine crisis. Weakness in global markets is a direct fallout of this Ukraine crisis. Brent crude oil at an eight-year high is another major macro concern for India. If crude remains at $95 a barrel for an extended period of time, the Reserve Bank of India (RBI) will be forced to revise upwards its 4.5 per cent CPI inflation projection for FY23. Continuation of the accommodative monetary stance, too, will be difficult. While all these are negatives, diffusion of the Ukraine crisis can trigger a sharp rebound in markets led by large-cap blue-chips” said Dr. V K Vijayakumar, chief investment strategist at Geojit Financial Services.
 
Apart from the global cues that might dictate the near-term trend, strong leadership from major sectors could help to gain momentum in the domestic market. As a trading strategy, G Chokkalingam, founder and chief investment advisor at Equinomics Research suggests taking a position in oil producers, metal, and IT sector stocks as they would benefit the most in the current scenario.
 
"Investors can look at OIL India, ONGC, Reliance Industries (RIL), Hindalco, Hindustan Zinc, Tata Steel, TCS and Cyient," he said.