Are Nifty 50 stocks entering a long-term bear market?

Riken Mehta
Follow me on Twitter @mehtariken

Indian stocks crashed on Friday and the hope of Nifty moving back above its 200 day-moving-average (DMA) seems like a herculean task now. Analysts attribute recovery in US, depreciating rupee and deteriorating earnings as the prime catalysts for this fall.

Four years back market participants rejoiced the comeback of UPA to power in 2009. The Nifty closed at 20 percent upper circuit, option traders made huge money and our very own renowned anchor Udayan Mukherjee kissed his computer screen.  Today, market participants including traders, investors, brokerage houses and even common man are awaiting the elections for change of guard in the north block.

So what lies ahead since the general elections are slated in April/May next year?  In my earlier article, I had explained moving averages and the significance of Nifty breaching 200 DMA.Today we will analyse the 200 DMA of Nifty constituents.

The 200 Day Moving Average is a long-term moving average which helps in tracking the overall health of an underlying asset. A stock trading above its 200 Day Moving Average is considered to be in a long-term uptrend and vice-versa. 
As per Friday’s closing price (August 16, 2013) 38 stocks out of Nifty 50 are trading below their 200 DMA. What’s even worse is that out of the remaining 12 stocks five are trading barely above their 200 DMA (within 10 percent above their 200 DMA) including defensives like ITC, Cipla and Bharti Airtel. If one analyses the data closely, then 30 stocks are trading 10 percent lower than their respective 200 DMA. Bajaj Auto, Cairn India and Reliance Industries are the latest entrants to join the club of stocks below 200 DMA.  
Friday’s fall was also accentuated by higher delivery based selling compared to 8-day average in some of the high beta stocks. As per latest earnings analysis of Nifty 50 stocks, total sales growth was lowest in last 15 quarters. Personally, I believed this reaction should have come much earlier when every macro economic data was hitting multi-year lows and yet Nifty managed to keep its head above the 200 DMA. Around 10-12 stocks in the Nifty were able to hold it due to their large weight age in the Nifty but it seems that the tide has turned in favor of bears.  A big move is mostly followed by choppiness (highly volatile intraday moves on either side) including a pullback rally and one needs to see how long will it last.
Company Name Current Price 200 Days Below 200 DMA 
Jaiprakash Asso 29.7 73.67 -60%
BHEL 105.55 199.4 -47%
Jindal Steel 213.15 335.31 -36%
PNB 500.25 761.52 -34%
DLF 145.45 221.06 -34%
Bank of Baroda 479.25 709.16 -32%
Tata Steel 235.35 335.26 -30%
IDFC 106.75 151.81 -30%
SBI 1,570.60 2,154.70 -27%
Reliance Infra 325.4 427.72 -24%
Larsen 757.45 994.38 -24%
Tata Power 73.45 96.17 -24%
BPCL 290.2 369.27 -21%
Grasim 2,332.90 2,966.13 -21%
Axis Bank 1,048.95 1,333.55 -21%
ICICI Bank 858.6 1,090.17 -21%
NMDC 108.75 136.74 -20%
Sesa Goa 130.25 163.2 -20%
Coal India 258.3 322.57 -20%
IndusInd Bank 356.4 435.69 -18%
Hindalco 93.55 106.58 -12%
Ranbaxy Labs 379.6 430.37 -12%
Maruti Suzuki 1,325.10 1,502.19 -12%
UltraTechCement 1,684.00 1,908.93 -12%
Power Grid Corp 98 110.72 -11%
HDFC Bank 587.9 661.74 -11%
GAIL 298.3 333.89 -11%
HDFC 737.9 821.92 -10%
ONGC 271.8 302.29 -10%
ACC 1,158.90 1,279.02 -9%
Ambuja Cements 173.4 190.9 -9%
Mah and Mah 840.1 917.05 -8%
Asian Paints 418.7 455.01 -8%
NTPC 139.65 151.33 -8%
Kotak Mahindra 632.25 679.37 -7%
Bajaj Auto 1,848.35 1,912.27 -3%
Cairn India 301.3 307.11 -2%
Reliance 826.7 832.97 -1%
ITC 320.4 312.14 3%
Cipla 414.7 397.48 4%
Bharti Airtel 335.65 311.75 8%
Tata Motors 313.95 291.34 8%
Dr Reddys Labs 2,166.15 1,968.57 10%
HUL 599 536.37 12%
Hero Motocorp 1,985.35 1,733.44 15%
Infosys 2,978.40 2,583.18 15%
Lupin 817.55 679.96 20%
TCS 1,780.90 1,455.33 22%
Sun Pharma 542.45 434.22 25%
HCL Tech 921 732.48 26%
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