Equitas Holdings, IndiGo, Voltas, Bata, REC among 36 stocks set to fall, shows MACD
These stocks have also been witnessing strong trading volumes of late.
Just four NSE-listed stocks look strong on the technical chart, against 36 that seem to be heading for a selloff in the coming days, suggests moving average convergence divergence or MACD.
The momentum indicator signalled a bearish crossover on the latter stocks, hinting at possible downsides. These stocks have also been witnessing strong trading volumes of late, lending credence to the emerging trend.
The list included Equitas Holdings, United Spirits, Strides Pharma, InterGlobe Aviation, Piramal Enterprises and Voltas.
JSW Energy, Bata India, KPIT Technologies, Prestige Estates and state-run PSUs such as REC, Rail Vikas Nigam and Indian Bank have also observed bearish trends.
The MACD is known for signalling trend reversals in traded securities or indices. It is the difference between the 26-day and 12-day exponential moving averages.
A nine-day exponential moving average, called the signal line, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities.
When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may see an upward movement and vice versa.
Four stocks, namely Muthoot Capital, L&T Technology Services, California Software and Linc Pen, have seen bullish crossovers.
Analysts said the MACD indicator should not be seen in isolation, as it may not be sufficient to take a trading call, just the way a fundamental analyst cannot give a ‘buy’ or ‘sell’ recommendation using a single valuation ratio.
As for Nifty50, fresh geopolitical tension has spilled water on the optimism and the momentum is now back with the bears, said Sameet Chavan of Angel Broking.
“The way we broke below crucial supports with ease does not augur well for the bulls. The previous support around 10,900 can now act as an immediate resistance and for the bulls to make a comeback they will have to close above Monday’s open-high of 11,000 with broad-based buying,” he said.
It will be interesting to see if Nifty breaches 10,740 on the downside in the near term, said Amit Shah, Technical Research Analyst at Indiabulls Ventures. Nifty is likely to face resistance near 10,970-11,000 zone, he said.
A close look at the stock chart of Equitas Holdings shows whenever the MACD line has breached below the signal line, the stock has shown a downward momentum and vice versa. On Tuesday, the scrip closed 2.01 per cent lower at Rs 100 on NSE.