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NEW DELHI: Momentum indicator moving average convergence divergence, or MACD, on Monday showed bullish crossovers on 30 counters on NSE.
Among the stocks that saw bullish crossovers were Exide Industries, InterGlobe Aviation, Jubilant Foodworks, Mahindra Mahindra, Talwalkars Better Value Fitness, Jubilant Life Sciences, GRUH Finance, JMC Projects, J Kumar Infraprojects and Kiri Industries.
Some of these counters have also been witnessing strong trading volumes of late, adding further credibility to the emerging trend.
Other stocks that saw this bullish crossovers included Ashoka Buildcon, Vipul, Swan Energy, Saregama India, RPP Infra Projects, Supreme Industries, Zydus Wellness, Electrotherm (India) and Healthcare Global Enterprises.
The MACD is known for signalling trend reversal in a traded security or index.
It also signalled bearish crossovers on 19 counters on NSE, indicating ‘sell’ signals.
The stocks included Indo Count Industries, KEC International, Can Fin Homes, Bharti Infratel, Tejas Networks, NIIT, Triveni Turbine and Gravita India.
MACD is a trend-following momentum indicator and 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.
Market experts say the MACD alone may not be a sufficient indicator to help take an investment call.
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.
Retail investors should consult financial experts before buying or selling a stock based on such technical indicators.
On Monday, the Nifty50 climbed to a fresh closing high of 11,387, but ended up making a small bearish candle on the daily chart that resembled a Doji pattern, suggesting that investors have turned indecisive at higher levels.
The upside appears to be capped and the index may need to hold above 11,368 level for at least the first hour of Tuesday’s session for any limited gain, say analysts.
If the index consistently trades below the 11,368 level in the first hour on Tuesday, it may come under pressure, said Mazhar Mohammad of Chartviewindia.in.
“In terms of wave structure, with Monday’s move, the index has entered into the fifth leg of an ‘Impulse’ on the upside.
The internal structure of the fifth leg, however, shows that it is not yet complete.
This means the Nifty has the potential to tap at the short-term target of 11,450,” said Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.
“If the bulls manage to surpass the 11,450 level on a closing basis, then they can ride the trend further till 11,640.
On the other hand, the 11,368-11,336 range shall act as immediate support area with a crucial support placed at 11,234,” Ratnaparkhi said.
Understanding MACDA close look at the Exide Industries stock chart shows whenever the MACD line has crossed above the signal line, the stock has always shown an upward momentum and vice versa.
Shares of the company closed 1.63 per cent higher at Rs 277.40 on August 6.
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MACD shows Exide, Jubilant Life, M M among 30 stocks ready to rally
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