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    Voda Idea, ITC, Asian Paints among 230 stocks showing bullish bias on MACD

    Synopsis

    Many of these stocks have been witnessing strong trading volumes of late, lending credence to the emerging trend.

    rise--8---istockiStock
    IIFL Securities expects Nifty50 finds support at 11,238 while it sees resistance around 11,400. On Tuesday, the index hit a high of 11,373.60.
    NEW DELHI: NSE benchmark Nifty50 might be seeing selling at higher levels, but at least 230 stocks are showing strong bullish bias on the moving average convergence divergence, or MACD, charts. The momentum indicator signalled bullish crossovers — a sign of bullish undertone — on these counters, hinting at possible upsides in the days ahead.

    Many of these stocks have been witnessing strong trading volumes of late, lending credence to the emerging trend. The list included stocks like Vodafone Idea, ITC, Nalco, Asian Paints, Bharat Electronics, NTPC, UPL, Emami, REC, India Cements and Coal India, among others.

    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.

    Stocks like Indiabulls Real Estate, Petronet LNG, Lemon Tree House, Indian Hotels, TCS, Dhampur Sugar and Berger Paints are also showing a bullish sentiment on this chart.

    MACD upTHE ECONOMIC TIMES

    Data also showed five stocks are showing bearish trends: HCL Technologies, Edelweiss Financial Services, Canara Bank, Inventure Growth and Bhagyanagar Properties.

    MACD downTHE ECONOMIC TIMES

    Analysts say while the MACD is a substantial trend detector, it 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. While one 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, one 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 11,350 mark, but saw some selling pressure later. "Nifty has approached a strong resistance zone of 11,300-11,350 and although there is no sign of weakness yet, it will not be easy for the index to overcome this sturdy wall," said Sameet Chavan of Angel Broking.

    "On the sectoral front, pharma stocks continue with their dream run and clearly there is no stopping for it. Also, few counters from auto and capital goods showed tremendous strength. The midcap space which has been buzzing since the last few days, has been the centre of attraction. Traders are advised to keep following such stock -centric moves; but we reiterate it is also important to keep booking profits and avoid aggressive bets overnight,” he said

    IIFL Securities expects Nifty50 finds support at 11,238 while it sees resistance around 11,400. On Tuesday, the index hit a high of 11,373.60.

    Understanding MACD
    BELTHE ECONOMIC TIMES

    A close look at the stock chart of Bharat Electronics shows whenever the MACD line has breached above the signal line, the stock has shown upward momentum and vice versa. On Tuesday, the scrip was trading 0.3 per cent down at Rs 107.90 on NSE.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

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