The benchmark Nifty50 managed to reclaim its 200-day moving average (DMA) on Wednesday but about half of top 500 stocks continue to languish below this key technical indicator.
The 200-DMA — nearly a year’s average of closing prices — is analysed by traders to understand the market sentiment.
A fall below these levels indicates a weak trend.
As many as 117 of the top 500 stocks are trading more than ten per cent below their 200-DMAs, data shows.
Among individual stocks, Tanla Platforms, Mastek, and Medplus Health Services are trading more than 30 per cent below their 200-DMA.
Meanwhile, stocks like Mazgaon Dock Shipbuilders, KRBL and Cochin Shipyard are comfortably above their 200-DMAs, with Mazgaon Dock 104 per cent higher and Cochin Shipyard 55 per cent higher.
Analysts said that half of the BSE 500 firms trading below 200-DMA clearly indicates that market sentiment isn’t strong and there is heightened selling pressure in the broader markets.
"When markets are volatile, mid-cap and small-cap stocks do not perform.
"The broader trend is unlikely to change immediately due to global headwinds.
"Gains will be more sector and stock specific," says AK Prabhakar, head of research, at IDBI Capital.
Rising bond yields, worsening geopolitical situation and fears of a global recession are forcing investors to stay away from risky assets.
The ascent of the US dollar against global currencies, along with rising bond yields, have made foreign portfolio investors (FPI) net sellers of Indian equities and added to investor woes.
Moreover, domestic markets are not immune to global turmoil despite the Indian economy doing better than many of its global peers in a year of global economic distress.