NEW DELHI: Market may be looking to break free, but reality is technical indicators do not appear strong enough to take Nifty beyond crucial 10,760-10,870 on higher side.As such, 69 stocks on NSE could see correction in coming days, as suggested by momentum indicator moving average convergence divergence, or MACD.The technical indicator has signalled a downward crossover -- a sign of bearish signal -- on these counters, hinting at possible downsides.
Many of these stocks have also been witnessing strong trading volumes of late, adding credibility to emerging trend.
The list includes banking stocks Bank of Baroda and Syndicate Bank, NBFCs Ujjivan Financial and PTC India Financial, aluminium maker Nalco and paint major Asian Paints.Sun TV Network, ICICI Lombard, Suven Life Sciences and JSW Energy are a few other stocks that look vulnerable on technical charts.MACD -- difference between 26-day and 12-day exponential moving averages -- is known for signalling trend reversals in traded securities or indices.
A nine-day exponential moving average called signal line is plotted on top of MACD to reflect 'buy' or 's ell' opportunities.
When MACD crosses above signal line, it throws up a bullish signal, indicating that price of security may see an upward movement and vice versa.Meanwhile, 28 stocks showed bearish crossover on daily charts, which include Jet Airways, JK Bank, Fineotex Chemical, SRF, Hikal, GHCL, Zee Learn and Mukta Arts.The MACD indicator should not be seen in isolation as it may not be sufficient to take a trading call, just way a fundamental analyst cannot give a 'buy' or 's ell' 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, say analysts.Nifty50 traders, meanwhile, are advised to be patient and wait for a decisive move.We sneaked below 10,733 on an intra-day basis, but could not close below it on Monday.
Going ahead, this remains to be a key support on a closing basis, followed by 10,692 and 10,628.
We are closer to moment (breakout) and probably in a day or two, things will get clear.
Be patient and keep following stock-specific moves, said Sameet Chavan of Angel Broking.The Nifty50 broke crucial daily moving averages and rising trendline on Monday.It attempted a bearish breakout from distribution triangle on intraday basis, but closed within pattern.
The stage looks set for index to exhibit a downward breakout, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.As advance decline ratio completely favoured bears, traders will be better-off to adopt a neutral stance till indices register a directional move, said Mazhar Mohammad of Chartviewindia.in.Understanding MACDA close look at stock chart of Bank of Baroda shows whenever MACD line has breached below signal line, stock tended to show a downward momentum and vice versa.
On Tuesday, scrip traded 0.50 per cent higher at Rs 121.60.