The MACD is known for signaling trend reversals in traded securities or indices.
The continuous battering of domestic stocks makes traders little nervous. according to Sources NSE barometer Nifty starts 200-day moving average, placed at 11,035, amid worries of the US-China trade tensions.
All this Negativity in the market, 18 stocks are signalling a bullish trend, as suggested by Analytics, or MACD. The stocks are Edelweiss Financial Services, Karda Construction, Future Retail, DB Corp, NLC India, Esab India, Parenteral Drugs and P&G Hygiene.
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 9 day rapid moving average, called signal line, is plotted on top of the MACD, which reflect 'buy' or 'sell' opportunities.
When the MACD crosses this signal line, it gives a bullish signal, indicating that the price of the security may give upward movement and so on.
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Meanwhile, some dozens of stocks, mostly mid-caps and small caps, look weak on the MACD chart. It indicates bearish crossover – a sign of bearishness – these this may lead possible downsides.
The list includes Hexaware TechnologiesNSE 2.39 per cent, DCB Bank, Sterlite Technologies, Karur Vysya BankNSE -1.32 per cent, Tata Chemicals, and Usha Martin.
SBI Life Insurance, Orient Cement, National Fertilizers NSE -1.00 per cent, Zensar Technologies NSE -0.36 per cent and Syngene International remained a few other stocks, which look weak on technical charts. Nifty 50 constituent BPCL also figured on the list.
A fundamental analyst cannot give a 'buy' or 'sell' recommendation using a single valuation ratio same The MACD indicator should not be separate, as it may not be sufficient to take a trading call.
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 far as Nifty 50 is concerned, Today could mark the 10th session of consecutive fall, even though sources recommendation the market is oversold.
“We were looking at a strong support zone around 11,250-11,200. But with Yesterday tail end correction, the support has now been violated with ease. Now, the final ray of hope is around the 11,100-11,050 range, which is a combination of the 61.8 % retracement as well as the ‘200-SMA’ on the daily chart. Let see if the Nifty respects the sheet anchor or not,” said sources.
Advised traders to remain light and avoid trading aggressively. “Although, the picture has not been rosy for investors, we still believe that this decline is providing an opportunity for those who are willing to build their portfolios,” he said.
“Nifty has broken several key supports, the latest one is 11,200. The larger picture shows the benchmark is approaching a medium-term rising trendline drawn from the October low of 10,004. The trendline is placed near the 11,000 mark, which is the short-term target for Nifty. The near-term resistance zone, on the other hand, has shifted lower to 11,280-11,130 zone,” Ratnaparkhi said.
A closer look at the stock chart of BPCL shows whenever the MACD line has breached below the signal line, the stock has shown downward momentum and vice versa. Today, the scrip traded at Rs 351, down 1.13 % on BSE.
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