The selloff has deepened: 3 out of 4 NSE500 stocks have fallen below the key index

MUMBAI: The recent sell-off has pushed about 77% of NSE500 stocks below their 200-day simple moving average (SMA) due to sharp foreign inflows amid rising inflation. When an indicator or a stock falls below its 200-day SMA, it indicates that security has a good trend and vice versa. But some analysts see the long-term weakness below the 200-SMA as an inverse indicator that the market is nearing the bottom.

About 70 stocks, including L&T Infotech, InfoEdge, L&T Technology Services, SAIL, Zydus Lifescience, Lupine and others, are trading 25% -70% below their 200-day SMA, which is considered a significant level or an indicator. Stock since it is a long term average.

Analysts say that the number of stocks below the 200-day SMA and the amount they are trading below this level could indicate a sharp fall in prices, often seen as an inverse indicator.

“Since most stocks have fallen below the 200-day SMA, we expect that in the next week or two, the market will see a downtrend, and we may witness a sharp recovery,” said Rajesh Palvia, Head Technical and Derivatives. Axis Securities. “Historical data also indicate that the market recovers quickly whenever such a sell-off occurs. We strongly recommend that investors buy stocks to take advantage of this decline.”

The Nifty 50 has declined 11% since April 1 and is trading 8.38% below its 200-day SMA. The Nifty is trading in 50 stocks, including 39 TCS,,,,,, HDFC, and below their 200-day SMA.

Analysts warn that extreme measures above or below the 200-day SMA do not help the rebound. In this situation, investors must spread their buying, they said.


The VP said, “Traders are advised to be cautious, hedge the position with call writing and keep their position light. Investors are advised to wait for further decline and then submit these beating names for positional perspective.”


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