Nifty getting fear of heights, but 42 stocks have 'buy' signals all over
MACD is known for signalling trend reversals in traded securities or indices.
By ETMarkets.com | Updated:
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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.
NEW DELHI: Domestic equity indices might be in an overbought zone following four days of continuous gains, but the positive momentum on at least 42 stocks is still showing no signs of reversing. These stocks are showing a strong bullish bias on the moving average convergence divergence, or MACD, charts.
The momentum indicator signalled bullish crossovers — a sign of bullish undertone — on these counters, hinting at possible upsides in the days ahead. Many of these stocks have also been witnessing strong trading volumes of late, lending credence to the emerging trend.
The list included Tata Group stocks Tata Motors and Tinplate, realtors NBCC, Sobha and Brigade Enterprises, IT major HCL Technologies, cement producer Century Textiles, shipping port operator Gujarat Pipavav Port and depository firm CDSL. Other stocks with similar trends included MTNL, LT Foods, Chalet Hotels, United Breweries, City Union Bank, Pidilite and Apollo Hospitals, among others.
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 indicate ‘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 also signalled bearish trends on some 52 counters. The list included Future Retail, Manappuram Finance, HCC, Grasim Industries, Engineers India, Ambuja Cements and Indian Bank.
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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.
This is because the MACD is a trend-following indicator. Though traders can increase the sensitivity of MACD by using shorter moving averages for computing MACD (e.g. five-day and 12-day moving averages), the lag effect will still be there. Hence, 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.
10 stocks that analysts say can offer solid returns over the next 2-3 weeks
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The domestic markets extended their stellar rally to the fourth straight session on Monday, with NSE barometer Nifty reclaiming the 10,800 mark. However, analysts are advising to adopt a cautious approach in the market. "In the current technical setup, we strongly recommend avoiding any major exposure and adopting a highly selective and stock-specific approach," said Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst and founder of Gemstone Equity Research & Advisory Services.
Here are 10 stocks that can offer solid returns over the next 2-3 weeks:
The domestic markets extended their stellar rally to the fourth straight session on Monday, with NSE barometer Nifty reclaiming the 10,800 mark. However, analysts are advising to adopt a cautious app..
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This counter appears to be in a consolidation mode after the recent rally from the lows of Rs 218 to Rs 324 levels and seems to have posted a near-term bottom at the recent low of Rs 293 with indecisive formations in a row for two sessions. With improved sentiment in the sector, sooner than later, it should gather momentum and resume its uptrend. In that scenario, it can head to Rs 350 levels which is the 50% retracement of its fall from Rs 491 to Rs 210 levels. Hence, positional traders are advised to buy into this counter with a stop below Rs 290 and look for a target of Rs 347.
This counter appears to be in a consolidation mode after the recent rally from the lows of Rs 218 to Rs 324 levels and seems to have posted a near-term bottom at the recent low of Rs 293 with indecis..
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This counter appears to have registered a decisive breakout above the level of Rs 48 which emerged as a formidable resistance as this counter slipped at least 3 times in the recent past after testing that level. Hence, as it is comfortably sitting above its erstwhile hurdle, positional traders are advised to adopt a two-pronged strategy of buying now and on any dip towards Rs 48 levels. Sustaining above Rs 45, it should initially head for a target of Rs 59. Stop suggested for the trade is close below Rs 45.
This counter appears to have registered a decisive breakout above the level of Rs 48 which emerged as a formidable resistance as this counter slipped at least 3 times in the recent past after testing..
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Momentum appears to have picked up once again in this counter as it registered a strong close after multiple listless trading sessions of the last couple of days. This strong price action of last Friday can expand its up move towards its interim top of Rs 772 levels as it cleared all other hurdles in terms of retracement levels. Therefore, positional traders can buy now and add further on the decline into the zone of Rs 705-698 levels and look for a target of Rs 767. Stop suggested for the trade is a close below Rs 695.
Momentum appears to have picked up once again in this counter as it registered a strong close after multiple listless trading sessions of the last couple of days. This strong price action of last Fri..
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For the last few months, the stock prices were gyrating within two converging trend lines and during the last session, prices finally broke from this range on the upside confirming a bullish ‘Symmetrical Triangle’ breakout. That said, the breakout is seen with a spurt in volume and a bullish candlestick pattern. On the daily chart, prices are well above 20SMA and 50SMA indicating short to medium uptrend. Moreover, momentum oscillator i.e. RSI is in positive zone supporting the 'buy' call. Looking at all the above evidence, the analyst senses a strong outperformance by this counter and hence recommends a buy at current levels for a target of Rs 1,240 over the next 14 sessions. The stop loss should be fixed at Rs 1,095.
[Analyst: Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking]
For the last few months, the stock prices were gyrating within two converging trend lines and during the last session, prices finally broke from this range on the upside confirming a bullish ‘Symmetr..
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This stock is in an uptrend continuously, moving in a higher top higher bottom price structure. On the daily chart, for the last few sessions, the stock prices have slipped into consolidation with a strong base forming around Rs 1,030 levels which also coincides with the upward sloping trend line. On the hourly chart, prices have moved out of recent consolidation suggesting early signs of resumption of the uptrend. In addition, on the daily chart, the analyst is witnessing a fresh buy crossover in MACD supporting the buy call. Going with the above observation, he recommends a buy on this stock at current levels for a target of Rs 1,138 over the next 14 sessions. The stop loss should be fixed at Rs 1,029.
[Analyst: Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking]
This stock is in an uptrend continuously, moving in a higher top higher bottom price structure. On the daily chart, for the last few sessions, the stock prices have slipped into consolidation with a ..
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The stock price has broken out from the symmetrical triangle pattern on the daily charts. Volumes during the breakout are high. The primary trend of the stock is bullish as the price is forming higher tops and higher bottoms and is also above all the important moving average parameters. The analyst recommends a target price for the stock at Rs 610 with a stop loss of Rs 560.
[Analyst: Vinay Rajani, Technical Research Analyst, HDFC securities]
The stock price has broken out from the symmetrical triangle pattern on the daily charts. Volumes during the breakout are high. The primary trend of the stock is bullish as the price is forming highe..
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The stock has broken out from bullish cup and handle pattern on the daily charts. Volumes during the breakout are high. The stock has been forming higher tops and higher bottoms. The auto sector has started outperforming and indicators and oscillators are indicating a bullish trend for the stock. The analyst recommends buying the stock for the target price of Rs 12,500 with a stop loss of Rs 11,300.
[Analyst: Vinay Rajani, Technical Research Analyst, HDFC securities]
The stock has broken out from bullish cup and handle pattern on the daily charts. Volumes during the breakout are high. The stock has been forming higher tops and higher bottoms. The auto sector has ..
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Post quick pullback rally from Rs 1,000 to Rs 1,150, the stock was witnessing narrow range activity. However, on daily charts, the stock has formed higher bottom series pattern along with positive SAR series which indicates uptrend is likely to continue in near term. In addition, on daily charts, the stock has formed a strong bullish candle along with incremental volume activity which indicates high chances of another uptrend rally from current levels. In short-run, Rs 1,100 should be the key level to watch, if the stock manages to trade above the same then it can extend gains up to Rs 1,225. Stop loss for the trade should be at Rs 1,100.
[Analyst: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities]
Post quick pullback rally from Rs 1,000 to Rs 1,150, the stock was witnessing narrow range activity. However, on daily charts, the stock has formed higher bottom series pattern along with positive S..
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BEML has formed a Rectangle formation on daily charts. Currently, the stock is consolidating between Rs 615 to Rs 670. The Higher low formation on weekly charts suggests the medium-term trend up and positive momentum is likely to continue in the near term. Hence, if the stock consistently manages to trade above Rs 635, we can expect a quick pullback from current levels. In addition, after a long time, the stock managed to close above Rs 650 which is broadly positive. This also suggests that a strong uptrend rally is not ruled out from current levels. Traders can look to buy the stock with a target price of Rs 705 and stop loss of Rs 635.
[Analyst: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities]
BEML has formed a Rectangle formation on daily charts. Currently, the stock is consolidating between Rs 615 to Rs 670. The Higher low formation on weekly charts suggests the medium-term trend up and ..
On Monday, Nifty50 formed an indecisive candle on the daily chart -- the third day in a row. On the shorter timeframe chart, the index has reached overbought levels following four days of back-to-back gains. Besides, negative divergences are developing, which suggest a temporary pause in momentum. " The RSI on the hourly time frame has turned southwards from the overbought zone, suggesting a pause or correction on the cards,” said Aditya Agarwala of YES Securities.
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For now, there are no apparent sell signals on the charts, said Mazhar Mohammad of Chartviewindia.in, who however felt that the recent intraday narrow ranges on Nifty50 can still be construed as weakening momentum. "The immediate hurdle for the index seems to be its 200-day simple moving average, whose value is placed at the 10,887 level. Weakness may get confirmed on a close below the 10,695 level," Mohammad said.
Understanding MACD
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A closer look at the stock chart of Tata Motors showed whenever the MACD line has breached above the signal line, the stock has shown an upward momentum and vice versa. On Tuesday, the scrip traded 1.74 per cent higher at Rs 110.90 on NSE.
