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Technically strong stocks in a sluggish market
Out of the total listed companies on the BSE, nearly 1148 companies are trading above their 200 day simple moving average. Some of these are ABB, ABG Shipyard, Aftek, Aditya Birla Nuvo...........
One is always confused about the stock that one should bet on and that which would double his investments. There are different ways to analyse the inherent strength of a stock. Some analyse it fundamentally and the others technically.
If you are analysing your stock technically there are different methods of doing it. One of the simplest way to choose quality stocks that you can bet on is by comparing the stock's 200 day simple moving average with its current price.
According to technical analysts, stocks that trade above their 200 days SMA, simple moving average, are technically stronger than the others that are trading below, as it indicates the willingness of the long term investors to hold or buy the share at those levels.
Explaining this, Technical Analyst, Vijay Bhambwani of BSPLindia, said, "200 days simple moving average indicates the willingness of the long term investors to hold or buy the share at those levels. Normally volatility is provided by the short-term players and those are weak hands. The 200 day SMA indicates where strong hands are present."
If you narrow down the list of companies and just concentrate on the BSE Sensex index, we find majority of the stocks trading below 200 days SMA. Out of the 30 BSE stocks, 14 stocks are trading above and 16 stocks below their respective 200 day moving average.
