Key indicator flashes green for BSE 500, JM Financial sees sharp upmoves ahead

The percentage of stocks above the 200-day moving average has risen to 23 percent.

The BSE 500 index could see sharp upmoves over the next one to six months, according to domestic brokerage JM Financial. As a result, the brokerage believes that any decline from the current levels should be used an opportunity to assume long positions in the broader market.

The key indicator - the percentage of stocks above 200-day moving average - in the universe of BSE 500 constituents declined below 10 percent during March. However, with the BSE 500 index moving up by ~8 percent in the current month, the percentage of stocks above 200-day moving average has increased to 23 percent now.

The BSE 500 index has declined from a high of 38,740 levels as observed on September 27, 2024 to a low of 30,967 levels as observed on March 3, 2025, a decline of 20 percent in a span of 5 months.

The index, in the current month, has recouped most of the declines observed in the month of February, 2025. "We believe the index has made a firm bottom at 30,967 levels and is poised for a sharp up-moves over the next 1-6 months period," said JM Financial.

Historically, a dip in the percentage of stocks above 200-day moving average below the 10 percent mark has seldom been observed. "In the last 20 years, it has been observed only on 3 occasions i.e. year 2009, 2012 and 2020. Further, we have observed that any move above 20 percent in the indicator confirms the trend reversal, followed by a sharp surge in the BSE 500 index," added the brokerage.

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In the year 2009, the indicator dipped below 10 percent on June 24, 2008 while recovering above 20 percent on April 13, 2009. Post that, following returns were observed:

• On a 1-month basis, the BSE 500 index made a high at 10.1 percent and low at -0.4 percent.
• On a 3-month basis, the index made a high at 46 percent while failed to make a lower low as observed during the 1-month period.
• On a 6-month basis, the index made a high at 64 percent while the low made on a 1-month basis was never breached.

• On a 1-month basis, the BSE 500 index made a high at 12 percent while it failed to make any lows below the levels observed on January 19, 2012.
• On a 3-month basis, the index made a high at 13 percent while didn't break below the levels observed on January 19, 2012.
• On a 6-month basis, the index declined from a high of 13 percent as observed on a 3-month basis. It made a low at -2 percent from the close of January 19, 2012, followed by a strong bounce up.

• On a 1-month basis, the BSE 500 index made a high at 10 percent while it failed to make any lows below the levels observed on May 29, 2020.
• On a 3-month basis, the index made a high at 21 percent and didn't break below the levels as observed on May 29, 2020.
• On a 6-month basis, the index made a high at 34 percent and never closed below the levels as observed on May 29, 2020.