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Sun Pharma, ITC, DLF, Wipro, Cipla among 50 stocks looking strong in a bearish market

NEW DELHI: Participants of the domestic equity market are a worried lot and they have a plenty of news developments to digest. Worsening of US-China trade woes, June quarter GDP print and infrastructure output, mega PSB mergers, poor auto sales and PMI readings are all making traders indecisive.

But 50 largecap and midcap stocks still look strong on the technical charts, and going by the signals on the moving average convergence divergence or MACD charts, these stocks might be heading higher in the coming days.

The momentum indicator has signalled bullish crossovers on these counters, hinting at possible upsides. The stocks have also been witnessing strong trading volumes of late, lending credence to the emerging trend.

The list included Sun Pharma, ITC, DLF, Wipro and Cipla besides Crompton Greaves Consumer, Corporation Bank, Jubilant Life Sciences, Raymond, Inox Leisure, NIIT, Simplex Infra and Godrej Properties, among others.

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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 29 stocks are showing bearish trends. They included Future Consumer, Muthoot Finance, Pidilite Industries, Rolta India, Sonata Software and IG Petrochemicals.

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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.

Some analysts are sensing an imminent bottom for the market.

“We advise traders to refrain from creating shorts and adopt a buy-on-decline strategy instead. On the downside, the 10,950 level followed by 10,874 would now be immediate supports for Nifty,” said Sameet Chavan of Angel Broking.

Nifty needs to hold above 11,000 to witness a rally towards 11,111 and then 11,141 levels, said Chandan Taparia of Motilal Oswal Services, who sees downside support at 10,950 and 10,880 levels.

Understanding MACD

A close look at the stock chart of Sun Pharma shows 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 0.21 per cent lower at Rs 449.45 on NSE even as Nifty traded 1 per cent down at 10,909.
Sun Pharma

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