The momentum indicator signalled bullish crossovers — a sign of bullish undertone — on 42 of these counters, hinting at possible upsides in the days ahead.
The list included sugar stocks such as
, Mawana Sugars, , , Rana Sugars and Sakthi Sugars.
Others include agrichemical stocks such as , Zuari Agro Chemicals and Insecticides. PSU stocks such as MMTC and and drug makers Morepan Labs and Strides Pharma are also showing bullish sentiment on this technical indicator.
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 also showed 38 stocks are showing bearish trends. They included , , Indian Bank, Mahindra & Mahindra, J&K Bank and Divi’s Labs, among others.
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, Nifty50 closed 11 points down at 15,740.
“Though a falling VIX is supporting the bulls, the momentum is slowing down on both Nifty & Nifty Bank. Nifty sustaining above the 15,750 level would signal it to advance further towards the 16,000-odd level,” Edelweiss said.
Sameet Chavan of Angel Broking said if one draws retracements on the recent correction, the 127 per cent retracement of the Nifty50’s correction from the February high of 15,431 to the April low of 14,151 came in the 15,770-15,800 range.
“Hence, it would be crucial to see how the index behaves around this range. On the flip side, the index has been respecting the ‘20 EMA’ on the hourly chart on intraday dips, which is now placed around the 15,675 mark. This level would act as a support for the 50-pack,” Chavan said.
Understanding MACD
A close look at the stock chart of Dalmia Bharat Sugar shows whenever the MACD line has breached above the Signal Line, the stock has shown an uptrend and vice versa.
