NEW DELHI: As many as 52 stocks, including , , Adani Enterprises, and UPL, looked strong on momentum oscillator MACD or moving average convergence divergence on Tuesday.
The momentum indicator signalled bullish crossovers — a sign of bullish undertone — on these counters, hinting at possible upsides in the days ahead. Some of these stocks have climbed up to 13 per cent in Tuesday’s trade so far.
At 9:40 am, IDBI Bank was trading 3.87 per cent higher at Rs 37.50, Adani Enterprises advanced 3.09 per cent to Rs 1,294.35, NBCC was up 3.25 per cent at Rs 42.90, UPL added 1.6 per cent to Rs 627.60. Tata Motors rose 0.7 per cent to Rs 295.05
Other stocks looking strong on MACD indicator are The New India Assurance, Firstsource Solutions, RCF,
, Ashoka Buildcon, Shreyans Industries and Welspun India. These stocks have gained up to 13 per cent so far on Tuesday.
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New India Assurance, Firstsource Solutions, RCF and KPIT Technologies were looking strong on momentum indicator MACD.
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 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 showed eight stocks are showing bearish trends. They included , which reported a 85 per cent plunge in March quarter consolidated profit on Monday. , , Atul, Sheela Foam, SMC Lifesciences, Xpro India and Renaissance Global are other stocks signalling bearish trends.
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Tata Chemicals, Hindustan Zinc and Aurobindo Pharma were among the eight stocks showing bearish trends.
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. 5-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.
On Tuesday, the Nifty50 topped 14,700 level, before earnings all the gains.
“The markets are still unsure of direction. Nifty has strong support at 14,400, which it is not breaking, and there is a stiff resistance at 14700, which it is unable to get past convincingly. Until either level is not taken out, we will not see a meaningful move,” said Manish Hathiramani, Technical Analyst at Deen Dayal Investments.
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EID Parry | Buy | Target Price: Rs 405
EID Parry has been consolidating within a tight range between Rs 302-339 levels for the last few weeks. Today the stock broke out of this range on the back of above average volumes. This augurs well for the uptrend to continue. Technical indicators are giving positive signals as the stock is trading above its 20-day and 50-day SMAs. Momentum readings like the 14-day RSI too are in a rising mode and not overbought, which implies potential for further upsides. With the technical set up looking attractive on all major timeframes, the analyst expects the stock to gradually move higher in the coming weeks. He recommends a buy on the stock between Rs 340-350 levels. Stop loss is at Rs 315 while targets are at Rs 405.
(Analyst: Subash Gangadharan, Senior Technical and Derivative Analyst, HDFC Securities)
L&T Technology Services has corrected sharply from a high of Rs 3,062 touched in early April 2021. The stock recently found support at Rs 2,543, which coincides with the previous swing low. On Friday, the stock broke out of its recent 5-day trading range on the back of above average volumes, indicating that buying was intense. With momentum readings like the 14-day RSI beginning to rise from oversold levels, it implies that the stock is ready to resume its intermediate uptrend after the recent correction. The analyst, therefore, recommends a buy between Rs 2,700-2,750 levels. He has set a stop loss at Rs 2,600 for a target of Rs 3,000.
(Analyst: Subash Gangadharan, Senior Technical and Derivative Analyst, HDFC Securities)
On the weekly charts, Divis Lab stock started its up move at Rs 980 from March 2018. Supported by up gaps and higher highs and higher bottoms, a continuous steady rise followed and the stock made a high of Rs 3,900 in March 2021. Since August 2020, the stock is trading above the averages and the super trend is in a positive mode. Recently, the stock traded within a range of Rs 3,000 and Rs 4,000 from Aug 2020, taking support of up gaps. The stock has given a weekly range breakout making new high of Rs 4,133, supported by volumes. Vortex, KST & Demand Index indicators are in a positive mode. The stock has the strength to achieve a target of Rs 5,000-6,000 in coming days, says the analyst who has a stop loss at Rs 3,350 on the trade.
(Analyst: Bharat Gala, President – Technical Research, Ventura Securities Ltd)
NOCIL | Buy | Target Price: Rs 250-300
On the weekly charts, the stock started its up move at Rs 45 from March 2020. A continuous steady rise followed, supported by higher bottoms and the stock made a high of Rs 199 in March 2021. Since July 2020, the stock is trading above the averages and the super trend is in a positive mode. Recently, the stock traded within a range of Rs 157 and Rs 185 for a month. Vortex & KST indicators are in a positive mode. The stock has the strength to achieve a target of Rs 250-300 in coming days. The analyst recommends keeping a stop loss at Rs 138 on a closing basis on the stock.
(Analyst: Bharat Gala, President – Technical Research, Ventura Securities Ltd)
Sameet Chavan of Angel Broking said index traders must try to buy as close as possible to intraday supports and avoid carrying aggressive bets overnight.
“As far as Nifty is concerned, 14,550-14,400 remains to be a sacrosanct support zone whereas we may see Nifty reclaiming 14,800-14,900 once it surpasses the 14,700 mark,” he said.
Understanding MACD A close look at the stock chart of IDBI Bank shows whenever the MACD line has breached above the signal line, the stock has shown an uptrend and vice versa.
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