Half of BSE 500, Sensex stocks back above 200-DMA

Half of Sensex and BSE 500 stocks are once again trading above their 200-day moving average (DMA) following last month’s broad-based rally in the market. This is a sharp reversal of trend compared to March, when three-fourths of the BSE 500 stocks had dipped below their long-term averages.

In April, the benchmark Sensex rallied 6.7 per cent, while the BSE Midcap, BSE Smallcap and BSE 500 indices surged 6.6 per cent, 8.3 per cent and 6.5 per cent, respectively. Experts say the rebound was triggered by a better-than- expected start to the March quarter earnings season, easing of geopolitical concerns and normal forecasts for the monsoon.

Mid-cap information technology (IT) stocks dominate the list of companies that are trading significantly above their 200-DMA. Indiabulls Ventures, currently trading 83 per cent above its 200-DMA, tops the chart. IT players such as Mindtree, KPIT Technologies and Sonata Software also feature among the top performing stocks. On the other hand, Vakrangee and PC Jewellers–plagued by corporate governance issues–are currently trading more than 60 per cent below their 200-DMA.

According to market participants, concerns on both the global and domestic fronts have started to show signs of easing. A recovery in corporate earnings seems to be on the way as the net revenue of India Inc for the quarter ending March touched a 12- quarter high. Analysts are also predicting the non-performing assets (NPA) cycle for banks to peak in the next one or two quarters. The monsoon forecast also remains strong, indicating a possible revival in rural consumption.