200 DMA or the 200 Day Moving Average, is an important indicator in technical analysis. The 200 DMA is a long term moving average that helps determine overall strength of an index or a stock.
The 200 DMA is generally used as a trend following indicator, which do not predicts market direction, but rather gives an idea about the current direction. Moving average is a lagging indicator, since it is based on past prices of an index or a particular stock.
An index that is trading below its 200 DMA is considered to be in a long term downtrend and when it is above, it is in an uptrend. Whenever the index or a stock trades near these averages, they attract support in a bull market and finds resistance in a bear market.
The two tables below show the 200 DMA of Nifty Indices and Nifty 50 stocks as of today.
If fact, the 200-day moving average may act as support or resistance simply because it is so widely used. It is almost like a self-fulfilling prophecy. The advantage of using moving averages is they are trend following and these indicators are always lagging, This lag factor not necessarily be construed as a disadvantage, but can be used viewed as a supportive factor to identify that whether a trader is line with the current trend or not.
