Overall breadth needs to improve for a reversal in Indian market
Over half of the Nifty 500 stocks are trading below 200-DMA, this points to a weak strength. Market breadth needs to improve if further highs are to be set
 "market, stocks, stock market trading, stock market")
Market breadth must improve to hold the current bullish reversal
Despite the benchmark indices clocking compelling rebound in the last three sessions; the BSE Sensex gained 2.57 per cent and Nifty 50 soared 2.60 per cent, the market breadth continues to persist sluggishness. Merely 194 stocks trade over the key price indicator of the 200-day moving average (DMA).
Historically, whenever there is a reversal in the stock market, the broad scenario should go with the tide otherwise, the rebound might not last longer. Will that be the case for Indian indices, if market breadth fails to gear up soon?
So far, major stocks like Tata Motors, Tata Steel, Cipla, Bajaj Finance, Bajaj Finserv, Eicher Motors, Maruti Suzuki and Reliance Industries are trading beneath the 200-DMA, implying that the follow-up buying needs to surface to carry forward the present momentum.
On contrary, stocks hitting fresh 52-week highs, such as Dr. Reddy's Laboratories, UltraTech Cement, Gujarat Pipavav Port, Godrej Consumer Products; eleven stock in total have reached new 52-week high on Friday, are forecasting a new leg of upside. Their chart patterns have grown sufficient strength for the next phase of the bull-run.
On Monday, Shares of Dr. Reddy's Laboratories, Sonata Software, Zydus Lifesciences, UltraTech Cement, Manappuram Finance and Gujarat Pipavav Port claimed fresh territories, by setting fresh 52-week highs.
Unless there is a significant rally in key stocks like Reliance Industries, Tata Motors, Tata Steel and Maruti Suzuki, the overall rally may not achieve the required strength to maintain the positive bias.
While the current pattern in the Reliance Industries’ stocks indicates a formation” of “Double Bottom, overcoming the Rs 2,350 should be a challenging affair and if manages to succeed, the stock may propel the bullish sentiment to much bigger heights.
Maruti shares must defend ground over Rs 8,500 level, to instigate a bullish stance. As of now, even staying over Rs 8,300 should provide some relief to the weak sentiment.
Tata Motors and Tata Steel are fairly trading near their respective 200-DMA. A positive leap over the hurdle should help both the stocks to regain their lost momentum.
In addition, if the number of stocks hitting new historic peaks or fresh 52-week highs continues to grow, the trend shall inherit the bullish stance. Stocks entering new territories reflect the sentiment of market where traders and investors are interested in taking bets on the optimistic side.
Unless there are adequate signals that the trend is turning downward, with selling pressure staying resilient, the present scenario points to a rising trend and could remain robustly elevated.
Market breadth
11:39 AM
Topics : Ultra Tech Company Reliance Industries Dr Reddy's Laboratories Limited stock market trading Trading strategies stock market rally technical analysis technical charts Chart Reading Trading tips Market trends
Don't miss the most important news and views of the day. Get them on our Telegram channel
First Published: Apr 03 2023 | 11:39 AM IST
