NEW DELHI: The New Year may have started on a dull note for domestic equities, but a smart bounce in benchmark indices during last four sessions has made many stocks look strong on technical charts.On NSE, 63 such stocks may advance in coming days, as suggested by momentum indicator moving average convergence divergence, or MACD.The technical indicator has signalled an upward crossover, meaning a bullish signal, on these counters, hinting at possible upsides.
Many of these stocks have also been witnessing strong trading volumes of late, adding further credibility to emerging trend.The list includes a host of blue chips such as ICICI Bank, HCL Technologies, Lupin and Ambuja Cements.Others included Jayshree Tea, PVR, Phillip Carbon, Mahindra CIE Auto, Aegis Logistics, Future Lifestyles, Godrej Agrovet, Vinati Organics and SP Apparels, among others.The MACD is known for signalling trend reversals in traded securities or indices.
It is difference between 26-day and 12-day exponential moving averages.
A nine-day exponential moving average, called signal line, is plotted on top of MACD to reflect buy or sell opportunities.
When MACD crosses above signal line, it gives a bullish signal, indicating that price of security may see an upward movement and vice versa.Meanwhile, 30 stocks showed a bearish crossover on daily charts.
They include Tata Steel BSL (erstwhile Bhushan Steel), Asian Paints, CESC, Mercator, Omaxe, Sunteck City and Ducon Infratech.The MACD indicator should not be seen in isolation, as it may not be sufficient to take a trading call, just way a fundamental analystcannot give a buy or sell call using a single valuation ratio.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 for Nifty50, it is ruling below its breakout point of 10,920.
If it breaches this level, it will unfold next leg of rally towards 11,050, 11,200 levels.Sameet Chavan of Angel Broking believes index may find support in 10,840-10,800 range.Meanwhile, daily strength indicator RSI continued to remain flat in overbought zone, indicating absence of strength.
But momentum oscillator Stochastic continued to scale up, signalling that upside momentum may continue in near term, said Rajesh Palviya, Head of Technical Derivatives Analyst at Axis Securities.UNDERSTANDING MACDA close look at stock chart of HCL Technologies shows whenever MACD line has breached below signal line, stock has showed a downward momentum and vice versa.On Tuesday, scrip traded 0.49 per cent lower at Rs 957.80 .