Around 70% stocks of benchmark index, NSE Nifty have entered ‘death cross'

Around 70% stocks of benchmark index, NSE Nifty such as TCS, L&T, Sun Pharma, ICICI Bank and others have entered ‘ death cross,’ a terminology used by technical analysts, where the short-term moving average (50-day) drops below its long-term moving average (200-day).

Technical traders who track ‘death cross’ indicator interpret the trend as bearish signal expecting stocks to remain under further pressure in the near-term.

“The structure of many marquee names in the index have broken, hence traders are expected to remain bearish in these counters for short-term, and stocks are likely to decline another 5% from current levels” said Dharmesh Shah, head of technical at ICICI Securities.

However, investors with 2-3 year investment horizon should bet on industry leaders as they are expected bounce back strongly with the recovery of Indian economy.

“Companies such as TCS, L&T, Sun Pharma and others are bellwether stocks and are leaders in their respective industries, hence investors can consider these large cap names with a long-term horizon as they are expected to generate favourable returns,” said Siddhartha Khemka, head of research at Centrum Wealth.