Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
Stock Analysis, IPO, Mutual Funds, Bonds & More

Indiabulls Housing, HDFC, Tata Motors among 156 stocks look set to fall, shows MACD

These stocks have been witnessing strong trading volumes of late.|
Oct 01, 2019, 11.03 AM IST
The MACD is known for signalling trend reversals in traded securities or indices.
NEW DELHI: While domestic stocks have recovered a lot in the rally since the corporate tax cut, one of every 10 NSE-listed stocks lacks momentum and could be in for selloff in the coming days, suggests moving average convergence divergence or MACD.

The momentum indicator has signalled bearish crossovers on 156 counters, hinting at possible downsides.

These stocks have been witnessing strong trading volumes of late, lending credence to the emerging trend.

The list included blue chips such as HDFC, Tata Motors, Hero MotoCorp and Tata Power.

Indiabulls Housing Finance, Indiabulls Ventures, Thomas Cook, Cadila Healthcare, Reliance Capital, L&T Finance Holdings and Adani Gas are a few other stocks that look weak on the technical parameter.

! of 156 donw

2 down

Down 3

Down 4

Down 5

Some of these stocks took heavy beating on Tuesday morning. Indiabulls Housing fell 7.09 per cent to Rs 237, Indiabulls Ventures plunged 10 per cent to Rs 111, Tata Power fell 1.76 per cent to Rs 61.40, Thomas Cook declined 0.5 per cent to Rs 134.40 and Tata Power and Hero MotoCorrp were down 1.5 per cent each.

Among others, HDFC Bank traded 0.7 per cent higher at Rs 1,236, Tata Motors was up 0.43 per cent at Rs 117.90.

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.

Meanwhile, data showed 13 stocks are showing bullish trends. They included Power Grid, Gujarat Gas, Hindustan Zinc, JSW Energy, NIIT and Redington, among others.


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, the 11,400-11,700 range will be keenly followed from here on, said Sameet Chavan of Angel Broking. “A sustained trade above 11,510 level can trigger a move back towards the 11,600-11,700 range, while the 11,370-11,400 zone remains a strong support. Bank Nifty, which was the culprit in Nifty’s Monday losses, is approaching a multiple support zone formed by key averages and retracement levels and a turnaround from this level cannot be ruled out. The directional bias remains positive, as long as Nifty holds the 11,200 mark,” Chavan said.

Mazhar Mohammad of said there seems to be multiple support points around the 11,400 mark and a positive close on Tuesday could have a bullish connotation.

“The market will show strength if Nifty manages to close above 11,610. Contrary to this, a close below 11,390 shall extend its correction towards the 11,251 level. Positional traders with high risk appetite can consider fresh buying around these levels with a stop loss below 11,382 on a closing basis for an initial target of 11,695,” he said.

Understanding MACD

A close look at the stock chart of Indiabulls Housing shows whenever the MACD line has breached below the signal line, the stock has shown a downward momentum and vice versa.
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service