SAIL, Tata Steel, JSPL, South Indian Bank, IDFC First among 120 stocks readying to rally, shows MACD

NEW DELHI: Technical analysts are optimistic on Dalal Street. They expect Nifty50 to touch the 12,000 mark on a closing basis sooner than later, with the positive momentum broadening to second-rung stocks.

Technical charts are signalling broader participation, and nearly 120 stocks on NSE now look set for a strong rally, as suggested by moving average convergence divergence, or MACD.

The momentum indicator signalled an bullish crossover – a sign of bullish undertone – on these counters, hinting at possible upsides.


These stocks have been witnessing strong trading volumes of late, lending credence to the emerging trend.

The list included shares of steelmakers like SAIL, Tata Steel, JSW Steel and JSPL and banks such as South Indian Bank, Union Bank, IDFC First Bank, Karnataka Bank and Bank of Maharashtra.

Among others, Coal India, HDFC Life, InterGlobe Aviation, Future Enterprises and Torrent Power are a few other names on the list.

The 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 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.

Data showed seven stocks are showing bearish trends. They included Manpasand Beverages, Page Industries, L&T Infotech, Blis GVS Pharma and Bajaj Consumer Care.

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.

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.

As far as Nifty50 is concerned, daily strength indicator RSI is moving upward and above its reference line, signalling a positive bias. Besides, the formation of higher top and bottom on the daily charts indicate that Nifty supports are shifting higher.


“If the 50-pack crosses and sustains above 11,970 level, it would witness buying, which can lift the index towards the 12,000-12,050 range. However, if the index breaks below 11,900, it would head towards the 11,850-11,820 range.

Understanding MACD

A close look at the stock chart of SAIL shows whenever the MACD line has breached above the signal line, the stock has shown an upward momentum and vice versa. On Tuesday, the stock traded 0.4 per cent down at Rs 53.40 on BSE.