Sensex Rises 100 pts, Nifty50 reclaims 10,600

Hero MotoCorp, JK Tyre among 49 stocks on the verge of cracking, shows MACD

Shrugging off subdued global cues, the domestic equity market opened on a positive note on Tuesday.At 09:18 am, the S&P BSE Sensex was trading 103 points or 0.30 per cent higher with M&M (up 1 per cent) being the top gainer and Tata Steel (down 1.63 per cent) the worst laggard.

The broader Nifty50 index of National Stock Exchange (NSE) was trading at a kissing distance of 10,600 at 10,597, up 12 points with 33 out of 50 constituents.

The domestic equity market ended higher for the third consecutive session on Monday, driven by gains in IT and financial stocks, even as IT major Tata Consultancy Services (TCS) briefly crossed the $100 billion mark in market capitalisation.

The S&P BSE Sensex added 35 points to close at 34,450 while the broader Nifty50 index of the National Stock Exchange (NSE) ended at 10,584, up 21 points.

However, momentum indicator moving average convergence divergence, or MACD, signalled bearish crossovers for 49 stocks on NSE.

MACD is known for identifying trend reversals.

Among the stocks that saw bearish crossovers were Canara Bank, Bank of India, Union Bank of India, Hero Moto Corp, Manappuram Finance, JK TyreNSE -1.04 % & Industries and CEAT.

Some of these counters have been witnessing strong volumes, adding further credibility to the emerging trend.

Other stocks that saw bearish crossovers included L&T Finance Holdings, Sintex Plastics Tech, Berger Paints, Dhanlaxmi Bank, Sadbhav Engineering and Page Industries.

At the same time, the MACD charts also showed bullish crossovers on 19 counters on NSE, giving ‘buy’ signals. They included Welspun India, NIIT, L&T Technology Services, Minda Corporation and SJVN, among others.

MACD is a trend-following momentum indicator, and is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving averages.

A nine-day exponential moving average, called the ‘signal’ line, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities.

When the MACD crosses below the signal line, it gives a bearish signal on the charts, indicating that the price of the security may experience a downward movement, and vice versa.

However, the MACD alone may not be sufficient to help take an investment call. Traders should make use of other indicators such as Relative Strength Index (RSI), Bollinger Bands, Fibonacci Series, candlestick patterns and stochastic to confirm such a trend.

Retail investors should consult financial experts before buying or selling a stock based on such technical indicators.

Meanwhile, MACD charts also showed bullish crossovers on 19 counters on NSE, hinting at a ‘buy’ signal. They included Welspun India, NIIT, L&T Technology Services, Minda Corporation and SJVN.

The Nifty50 index on Monday formed a ‘long-legged Doji’ candle on the daily chart, suggesting a struggle between the bulls and the bears to gain an upper hand ahead of April series F&O expiry.

Mazhar Mohammad of said Monday’s wild swing suggested that demand and supply forces have reached an equilibrium stage and the market is approaching a potential reversal point.

“Traders need to remain cautious and look for Nifty to clear the 10,630 level on a closing basis, which shall lead the index towards its next logical target of 10,900. A close below 10,500 shall enhance selling pressure on the market, and usher in a short-term downtrend,” the expert said.

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