The momentum indicator has signalled bullish crossovers — a sign of bullish undertone — on 38 counters, hinting at possible upsides in the days ahead. Some of the stocks have already climbed up to 13 per cent in Tuesday’s trade so far.
The list included
, which climbed 2.4 per cent in Tuesday’s trade to Rs 545. IFB Industries (up 5 per cent), AU SFB (up 3.7 per cent), Jubilant FoodWorks (up 3 per cent), Dilip Buildcon (up 2.5 per cent) and Phillip Carbon (up 2 per cent) are some of the stocks that gained in Tuesday’s trade and are sending out positive signals on the technical charts, suggesting further upsides.
KEI Industries soared 10 per cent to Rs 579.95 and was exhibiting a positive trend on the MACD indicator. Vakrangee, City Union Bank, V-Guard, GNA Axles and La Opala were other stocks sending out positive signals. Kotak Mahindra Bank, Britannia Industries and ACC added up to 1 per cent.
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 29 stocks are showing bearish trends. They included Bharti Airtel, Tata Motors, SAIL, Cadila Healthcare, Fortis Healthcare, SBI Life Alembic and Jamna Auto.
However, analysts warn that 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, 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 the 15,100 level.
Sameet Chavan of Angel Broking said the quality of participation has improved. On Monday, the banking space led from the front with a solid intraday rally. “When this pocket contributes heavily, the bounce is considered a genuine one,” he said on Monday.