RIL, HDFC, Airtel, Suzlon among 66 stocks set to log solid gains, shows MACD
The MACD is known for signalling trend reversals in traded securities or indices.
But the momentum on 66 stocks looks strong, if one were to go by the momentum indicator, moving average convergence divergence or MACD.
These scrips have formed ‘bullish crossovers’ on the technical charts, suggesting that there might be more legs to their rally. These stocks have also been witnessing strong trading volumes of late, lending credence to the emerging trend.
The list included RIL, HDFC and Bharti Airtel, from among Nifty50 stocks. At 9.40 am, shares of Reliance Industries traded 2.42 per cent higher at Rs 1,269, while HDFC gained 0.60 per cent to Rs 2,175 and Bharti Airtel rose 0.4 per cent to Rs 349.
Nifty traded at 11,617, up 17.20 points or 0.15 per cent.
Among others, Suzlon Energy, Tata Global Beverages, United Spirits, Indraprastha Gas, Rail Vikas Nigam, Ujjivan Financial and Bata India have also formed bullish crossovers, suggesting a firm trend.
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 23 stocks are showing bearish trends. They included DHFL, NTPC, Dabur India, Biocon, Lupin, PTC India, Usha Martin, Shree Renuka Sugars, PTC India Financial and Ajanta Pharma, 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.
It is a bit difficult to time entry now for those traders, who have already missed the bus, said Ruchit Jain of Angel Broking.
“But this rally has more legs and one should use the ‘buy on dips’ strategy and look for stock-specific opportunities. The immediate support for Nifty lies in the 11,400-11,300 range, whereas near-term resistance is seen around 11,705 and 11,800 levels,” he said.
Nagaraj Shetti, Technical Research Analyst at HDFC Securities, said there is a possibility of consolidation or minor correction from the highs, before the index sees further upside.
He sees 11,800 as the immediate resistance for Nifty.
A close look at the stock chart of Reliance Industries shows whenever the MACD line has breached above the signal line, the stock has shown an upward momentum and vice versa.