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Airtel, AB Capital, Bandhan, Tata Global among 54 stocks about to crack, shows MACD

Some of these counters have also been witnessing strong trading volumes in recent days.

ETMarkets.com|
Updated: Dec 10, 2019, 10.53 AM IST
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A nine-day exponential moving average, called the signal line, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities. W
Nifty50 formed a ‘Doji’ candle on the daily charts on Monday with momentum indicator Moving Average Convergence Divergence (MACD) suggesting some corrective action going forward. As expected, the 50-share index traded in the red in early trade on Tuesday.

Among specific counters, as many as 54 stocks on NSE looked weak on the MACD charts, as the technical indicator signalled a downward crossover, hinting at possible downsides over the next few days.

Some of these counters have also been witnessing strong trading volumes in recent days, adding further credibility to the emerging trend.

The list included Bharti Airtel, Aditya Birla Capital, Bandhan Bank, Tata Global Beverages, Coffee Day Enterprises, Havells India, Future Enterprises, Adani Gas AIA Engineering, Supreme Industries, JSW Energy, Ashoka Buildcon and ACC, among others

below signal

The MACD is known for signalling trend reversals in a traded security or index. 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.

Meanwhile, 25 stocks witnessed bullish crossovers on these charts. They included EID Parry, La Opala RG, Jindal Worldwide, Pokarna, Oil India, BF Utilities, BEML and Viswaraj Sugar, among others.

above signal

The MACD indicator should not be read 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.

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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.

On Tuesday, Nifty traded 12 points, or 0.10 per cent, down at 11,925 around 9.30 am (IST).

Amit Shah, Technical Research Analyst, Indiabulls Ventures said, “Traders should stay short at current levels. The overall trend is still bullish. On the downside, the immediate support is seen in the 11,900-11,800 zone. The 12,000 level will offer immediate resistance but the bullish momentum can sustain only if the index manages above the 12,100 mark.”

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas said, “Nifty formed a Doji on the daily chart on Monday, which shows indecision among market participants. Unless Nifty scales the psychologically important 12,000 mark on a closing basis, it is likely to test the junction of the 40 DEMA and the Bollinger Band in the 11,820-11,800 zone.”

Understanding MACD
understanding MACD

A close look at the stock chart of Bharti Airtel shows whenever MACD has breached below the signal line, the stock has tended to show a downward momentum and vice versa. The scrip closed almost flat Rs 445.85 on Monday.

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