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


You can switch off notifications anytime using browser settings.
12,086.70114.9
Stock Analysis, IPO, Mutual Funds, Bonds & More

MACD shows TCS, HCL Tech, Mindtree, Suzlon among 25 stocks readying to rally

The MACD is known for signalling trend reversals in traded securities or indices.

ETMarkets.com|
Updated: Jul 30, 2019, 02.06 PM IST
0Comments
Getty Images
Rise,-gain-2---Getty
There is a probability of a pullback, but the overall market breadth needs to improve for sustainability of such an upmove, said Ruchit Jain of Angel Broking.
NEW DELHI: The ongoing selloff in the equity market has been so intense that Nifty has ended in the red in seven out of past eight sessions. The index has entered the oversold zone, having lost 500 points in eight sessions. The situation is worse in the broader market.

Despite this, at least 25 stocks on NSE look set to rebound, as suggested by moving average convergence divergence or MACD.

The momentum indicator signalled a bullish crossover on these counters, hinting at possible upsides. These stocks have been witnessing strong trading volumes of late, lending credence to the emerging trend.

The list included IT shares TCS, HCL Technologies and Mindtree, commodity-linked stocks Balrampur Chini and Jayshree Tea, and fertiliser stocks Deepak Fertilisers and GNFC.

Suzlon Energy, Aptech, GHCL, Den Networks and Shalimar Paints are among other stocks that have seen similar bullish crossovers.
up 1

up 2

3 up 41


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.

Data showed 33 stocks are showing bearish trends. They included Dish TV, Vedanta, Ambuja Cements, Power Grid, HDFC Life Insurance, IGL, Balkrishna Industries and Hindustan Unilever. Shree Renuka Sugars, BEML, PVR, Inox Leisure and Alembic Pharma are also looking weak on the technical charts.
Down 33 a

Down 33 b

Down 33 c

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.

Traders should make use of other indicators such as Relative Strength Index (RSI), Bollinger Bands, Fibonacci Series, candlestick patterns and Stochastic to confirm an emerging trend.

As for Nifty50, Mazhar Mohammad of Chartviewindia.in believes it is headed for the 11,100 level. “Unless, Nifty decisively clears the short-term resistance point at 11,311, it will not regain strength. The threat of breaking below 11,108 registered in May remains high, from where the entire upmove towards the 12,100 mark unfolded in the past. In that scenario, sub-11,000 levels are a strong possibility. For the time being, as risk-reward ratios do not favour the bears, traders should avoid positional shorts but can consider intraday shorts below 11,150 to achieve modest gains,” Mohammad said.

There is a probability of a pullback, but the overall market breadth needs to improve for sustainability of such an upmove, said Ruchit Jain of Angel Broking.

“The immediate resistance for the index is seen around 11,300, and a move above this level can lead to a pullback towards the 11,400-11,450 range,” Jain said.

Understanding MACD
A close look at the stock chart of TCS shows whenever the MACD line has breached above the signal line, the stock has shown an upward momentum and vice versa. On Monday, the scrip traded 0.76 per cent higher at Rs 2,125.10 on NSE.
TCS

Also Read

MACD trading rules

What's MACD and what are its uses?

Strong momentum setting in on these midcaps & smallcaps, suggests MACD

Tech View: Nifty forms small bullish candle, but MACD is in 'sell' zone

Airtel, AB Capital, Bandhan, Tata Global among 54 stocks about to crack, shows MACD

Comments
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


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