Investors to stay cautious about stocks trading below the relevant moving average:Analysts
Published On: Friday, May 21, 2021 | By: Team KnowMyStock
Benchmark indices were on course for yet another firm session today(21st May 2021), breaking away from their two-day losing streak, mainly due to investors looked past the global inflation concerns and hoped for a pick-up in Covid vaccination drive back home. Besides, strong March quarter results also supported the market sentiment. Earlier this week, the S&P BSE Sensex closed above the 50,000-mark for the first time since April 1. The Nifty50, on the other hand, clinched the 15,000-mark on a closing basis for the first time since March 12. The indices, however, succumbed to profit-booking and erased around 1 percent in two days. Today bulls lifted the Sensex and the Nifty over 1 percent as they touched highs of 50,275 and 15,108.
With today's rally, the benchmark indices have tried to conquer the resistances of 50,000 and 15,000 levels decisively for the third time. Furthermore, the momentum, too, has started showing signs of an upside breakout towards 51,300 and 15,300 levels as any mild intermittent correction is expected to be met with firm support, according to the daily charts.
Yet, this positive scenario at the index level has been unable to revive optimism in stocks of major market leaders. A total 53 stocks from the Nifty 500, including those of Britannia Industries, Reliance Industries, Hero MotoCorp, Maruti Suzuki India, Biocon, PVR, RBL Bank, Ujjivan Financial Services, and Zee Entertainment are trading below 200-Days Moving Average (DMA).
To put things in perspective, if a stock is trading below the relevant moving average in a bullish environment, then it shows a high possibility of a negative sentiment going forward. This situation on chart indicates weakness and hints at a probability of further decline. Therefore, experts advise investors to stay cautious in such counters.
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