Yes Bank, Dhanlaxmi Bank, Sonata, Aegis among 17 stocks all set to gain, shows MACD
These stocks have been witnessing strong trading volumes of late.
By ETMarkets.com |
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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: The sharp fall on Dalal Street in last two sessions has made the bears get an upper hand. Tuesday’s session also began weak, making analysts to surmise that Nifty50 may have made its short-term top around the 12,100 level.
That said, there are at least 17 stocks on NSE, which look strong on the technical charts, as suggested by the moving average convergence divergence, or MACD.
The momentum indicator signalled an bullish crossover on these counters, hinting at possible upsides from here on. These stocks have been witnessing strong trading volumes of late, lending credence to the emerging trend.
The list included YES Bank, which gained 5.67 per cent on Monday and a further 2.5 per cent on Tuesday even in a weak market setup.
Dhanlaxmi Bank, PNB Gilts, BF Utilities, Sonata Software, Aegis Logistics, Cholamandalam Finance and Music Broadcast are some of the other stocks that look strong on the MACD charts. Others include Alkem Laboratories, Hatsun Agro, BF Investment and Future Supply Chain.
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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 there are 181 stocks, which are showing a bearish trend. They included Bajaj Finance Axis Bank, Hindalco Industries, Sun Pharma, HDFC Bank, SAIL, NTPC, Power Grid, Cipla, Ambuja Cements, OBC, LIC Housing, Siemens and Indiabulls Realty.
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“The recent correction was so severe in some of the marquee names that it was extremely intimidating,” said Sameet Chavan of Angel Broking.
“The stock-specific mayhem has started again and this time, rank outperformers are also not spared. Hence, traders are likely to adopt a cautious approach and should ideally avoid trading aggressively for a while,” Chavan said.
Analysts said 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 for Nifty50, the important opening upside gap of May 20 is all set to be filled soon at 11,426. This gap is expected to offer support to the index and one may expect a minor upside bounce near 11,400-11,425 levels in the next few sessions.
“Nifty50 has seen a double top breakdown below 11,625 on the daily chart. It could trigger more panic. A strong support for the index is seen in the 11,500-11,426 range and the immediate strong hurdle is in the 11,620-11,690 zone," said Rohit Singre, Senior Technical Analyst, LKP Securities.
Understanding MACD A close look at the stock chart of Dhanlaxmi Bank shows whenever the MACD line has breached above the signal line on this country, the stock has shown upward momentum and vice versa. On Tuesday, the scrip traded at Rs 16.15 on NSE, up 0.96 per cent.
How Sitharaman's Budget can impact Sensex stocks
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There were no immediate triggers except for NBFC shares as the bellwether index fell amid fears of stock offloading to meet the new public holding rule. But analysts are betting on consumer and construction stocks in the medium term on the back of higher rural income and infra spending. Take a look at how the Budget can move these 30 Sensex stocks. Source: ICICI Securities
Note: Target price, stop loss and recommendation have a horizon of one year
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