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REC, VIP, Bajaj Finance, Zydus among 50 stocks ready to rally, shows MACD

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NEW DELHI: Even as equity benchmarks Sensex and Nifty scaled fresh new highs on Monday, momentum indicator moving average convergence divergence, or MACD, showed bullish crossovers on 50 counters on NSE.

Among the stocks that witnessed this bullishness were REC, Adani Transmission, GSFC, Orient Refractories, Piramal Enterprises, Bajaj Finance, Zydus Wellness, Caplin Point, Network 18 Media Investments and Time Technoplast. Some of these counters have also been witnessing strong trading volumes of late, adding further credibility to the emerging trend. Other stocks that saw bullish crossovers included Balaji Telefilms, VIP Clothing, Ashoka Buildcon, Khaitan (India), Cox Kings, Bayer Cropscience, FIEM Industries, Vaibhav Global, Eurotex Industries Exports and Dhunseri Tea Industries. The MACD is known for signalling trend reversal in a traded security or index. It also signalled bearish crossovers on 56 counters on NSE, indicating ‘sell’ signals.

They included Reliance Communications, LIC Housing Finance, Sanwaria Consumer, JK Paper, Karnataka Bank and Karur Vysya Bank, among others. 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 Nifty took out the immediate resistance at 11,620 and ended near the 11,700 level, suggesting that the bulls were back on a buying spree after Friday’s indecisiveness.Sensex closed at a fresh record high of 38,694, with a gain of 442 points or 1.16 per cent, while Nifty jumped 135 points, or 1.17 per cent, to settle at a new peak of 11,691.

It took 37 sessions for Nifty to climb from 10,700 to 11,700.

On Monday, a large bullish candle on Nifty’s daily chart was signalling confidence, indicating that the market may do well in the rest of week.

“Nifty’s daily chart shows a medium-term rising channel has been guiding the index northward for last several weeks.

The index traded with a bullish bias on Monday and topped the 11,700 mark.

In terms of the wave structure, Nifty is forming an extension on the upside and is now targeting 11,840 on the upside.

On the other hand, the 11,600-11,532 range shall now act as a key support zone,” said Gaurav Ratnaparkhi, senior technical analyst at Sharekhan.Understanding MACD A close look at the stock chart of Bajaj Finance 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 1.42 per cent higher at Rs 2,958 on NSE on August 27.




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