Best stocks to buy today: Ambuja, Equitas, SBI Life among 25 stocks showing strength as market seeks to rebound

NEW DELHI: As domestic equity indices struggled to recover from Monday mayhem, 25 stocks from the broader market showed strength on the technical charts.

These stocks are also showing strong momentum, as per the moving average convergence divergence or MACD.

The momentum indicator formed a bullish crossover on these counters, hinting at possible upside. Strong trading volumes on many of these counters are lending credence to the emerging trend.

The list included Ambuja Cements, Equitas Holdings, Petronet LNG, SBI Life Insurance, Hikal, Aarti Industries, CSB Bank, Venky’s India, Cochin Shipyard and GSK Pharma, among others.

These stocks have just seen bullish crossovers on the momentum indicator. The 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 reflect ‘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 also showed bearish trends on 26 counters. They included ICICI Bank, Aurobindo Pharma, SJVN, Adani Enterprises and Phillip Carbon.

Analysts said 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.

On Tuesday, NSE barometer Nifty50 turned flat despite seeing a strong start. Monday’s close near the Lower Bollinger Band allowed for a pullback at open, Geojit Financial Services.

“If Nifty manages to clear the 11,913 level in this pullback, we may see easing of the bear grip, which may fill Monday’s gap-down opening and take Nifty towards the 12,070 mark. Its inability to push beyond the 11,913 level will confirm a resumption of the down-move, aiming the 11,560-11,200 zone, with limited support from the 200-SMA at 11,682,” the brokerage said.

Sameet Chavan of Angel Broking advised traders to stay light on positions and avoid taking undue risks. On the upside, the 11,900 level followed by 11,950 level would now be seen as immediate hurdles.

Understanding MACD

A close look at the stock chart of Ambuja Cements shows whenever the MACD line has breached above the signal line, the stock has shown an upward momentum and vice versa. On Tuesday, the scrip traded 1 per cent higher at Rs 212.