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Last Updated : May 21, 2020 10:49 AM IST | Source: Moneycontrol.com

More than 120 stocks with m-cap of over Rs 10,000 crore trade below 200-DMA

Nifty50 is trading below both its short term and long term moving average which is slightly bearish in nature. 200-Day SMA is considered as a crucial level by technical chartists to define the long term trend of the market.


Nifty50 broke below its 200-Days Simple Moving Average (SMA), or popularly known as the long-term moving average, in February. Meanwhile, there are more than 120 stocks with market capitalisation of over more than Rs 10,000 crore that are trading below this level.

The 200-DMA of Nifty50 is placed at 11,056 levels according to daily charts, and its short term moving average or 50-DMA is placed at 9199, as of data collated on May 19.

Nifty50 is trading below both its short term and long term moving average which is slightly bearish in nature. 200-Day SMA is considered as a crucial level by technical chartists to define the long term trend of the market.

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There are 122 stocks from the mid & large-cap space that have a market-cap of more than Rs 10,000 cr which are trading below their 200-Days SMA include names like TCS, HUL, Infosys, Kotak Mahindra Bank, Maruti Suzuki, and Asian Paints, etc. among others.

“It is essentially indicating the weak structure of the market. This time around even the large-cap stocks haven’t been spared and probably bearing the brunt of the selling,” Ashish Chaturmohta, Head of Technical and Derivatives, Sanctum Wealth Management told Moneycontrol.

“Volumes especially delivery volumes should be tracked with a price to see where accumulation or distribution is happening,” he said.

Note: Here is the list of top 50 stocks that are trading below 200-Days SMA filtered based on M-cap. Source: Moneycontrol Stock Screener

200 DMAA

Prices below 200-DMA do give an indication about the trend but traders should not look at just one parameter in isolation, but instead take a decision by combining other relevant parameters such as RSI, stochastic, volume, delivery, etc. among others.

Theory suggests that as long as prices stay above 200-Day SMA, the stock is considered to be in an overall uptrend and vice-versa in case it started trading below this crucial long term moving average. However, investors

“200-day MA is basically an average price of the stock of the last 200 days. If the stock is above the 200-day MA, its major trend is bullish and vice versa. Another parameter that can be handy in trading can be RSI on larger timeframes (weekly & monthly),” Rajesh Palviya, Head - Technical and Derivative Research, Axis Securities Ltd told Moneycontrol.

“RSI is a momentum indicator that shows the relative strength of the stock. Whenever the RSI reading goes above 70, it says that the stock is highly overbought and may experience some profit booking in the near term. Whereas, whenever the RSI reading goes below 30, it says that the stock is highly oversold and we may experience some pullback in the near term,” he said.

The technical structure of the Midcap and the Smallcap indices suggest that the broader market space has also completed the short-term pullback, and is poised to align with the larger downtrend.

“The 200-DMA is definitely an important parameter which underscores their strength. However, that is just one of the pieces in the entire puzzle. A trader should never use any tool in isolation,” Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas told Moneycontrol.

“An ideal approach is to use a combination of tools (not more than 4-5), and adopt the weight of evidence to arrive at a conclusion. Price patterns is a very useful tool as it helps in identifying a proper trade set up with specific stop loss and targets. Traders should be looking for such trade setups with Risk Reward of minimum 1:2,” he said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on May 21, 2020 10:49 am
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