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.
NEW DELHI: Extending the gains into a third session, equity benchmarks Sensex and Nifty opened in the green on Tuesday even though US President Donald Trump downplayed the chances of a breakthrough in the US-China trade talks, scheduled for this week.
The Nifty50 opened Tuesday’s session at 11,576, while the Sensex kicked off the day at 38,360.
As the market traded higher, momentum indicator moving average convergence divergence, or MACD, signalled upward crossovers for 41 stocks on NSE, meaning possibility of more upsides on these counters.
Among the stocks that saw bullish crossovers were Bharti Infratel, Larsen & Toubro, Sequent Scientific, India Cements, Cadila Healthcare, Escorts, Magma Fincorp, Tata Power Company and Hubtown.
Some of these counters have been witnessing strong trading volumes of late, adding further credibility to the emerging trend.
ADVERTISEMENT
Other stocks that saw bullish crossover included PTC India Financial Services, Sintex Industries, Can Fin Homes, Equitas Holding, Mold-Tek Technologies, Rolta India, Jamna Auto Inds, Reliance Industrial Infrastructure, MOIL, Texmaco Rail & Engineering, Ashoka Buildcon, ADF Foods, Bombay Burmah, Dalmia Bharat Enterprises, Oberoi Realty, BLB, Greenply Industries, APCL, Syngene International, Agri-Tech (India), JMC Projects (India), Pearl Global Industries, Swaraj Engines, Advani Hotels & Resorts (India), Cimmco, Aspinwall & Company, Jayant Agro Organics, Sagar Cements, Williamson Magor & Company, Ruby Mills, SPML Infra and MPS.
The MACD is known for signalling trend reversals in a traded security or index.
At the same the time, the indicator showed bearish crossovers on 29 counters on NSE, giving ‘sell’ signals. The stocks included Infosys, Delta Corp, Nelco, Info Edge (India), Bharat Dynamics and Magadh Sugar & Energy.
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.
ADVERTISEMENT
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.
ADVERTISEMENT
Retail investors should consult financial experts before buying or selling a stock based on such technical indicators.
Understanding MACD A close look at the Bharti Infratel chart shows whenever the MACD line has crossed above the signal line, the stock has always seen an upward movement and vice versa.
Around 10:45 am on Tuesday, shares of the company traded nearly 1 per cent higher at Rs 287.20 on NSE.
