Domestic benchmark indices have hit fresh yearly highs in the previous session, demonstrating immense bullishness of the current breadth. The BSE Sensex reached 61,797 and Nifty 50 scaled 18,267, both conquering their respective previous highs.
Following a sharp reversal at the end of the April series, the BSE Sensex and Nifty 50 took a breather near to their respective the 200-day moving average (DMA) before offering the next leg of upside few sessions ago.
Now, when the indices have reached fresh yearly highs, stocks crossing or hovering near their 200-DMA shall see added upward momentum, with price action beginning to display eye-catching up move.
Trading fraternity regards the 200-DMA as the most decisive indicator in the stock market. Stock rising or settle over the 200-DMA are deemed to possess strength and required momentum to rise further.
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At the moment, roughly 282 stocks are trading over the 200-DMA, while 225 stocks have yet to declare their positive appearance. This is formally viewed as the market breadth, which seems to be in favour of bulls.
Technically, trading or building a bias against the trend has not been fruitful in the past. Trend is a friend, and moving along the trend assists in building a risks-free portfolio.
