stock ideas: Tata Power, Equitas Holdings, Shriram Transport among 88 stocks look set to fall, shows MACD


NEW DELHI: As benchmark equity indices struggled to get past their immediate resistance levels, dozens of stocks are showing loss of momentum, suggests moving average convergence divergence or MACD.

The momentum indicator formed a bearish crossover on 88 counters on NSE, hinting at possible downsides in the days ahead. Strong trading volumes on many of these counters are lending credence to the emerging trend.

The list included Tata Power, Equitas Holdings, TV 18 Broadcast, Castrol India, Shriram Transport, Balkrishna Industries, Godrej Properties, The New India Assurance Company, Pidilite Industries, GSFC and PTC India Financial, among others.

Down 83 1

Down 83 2

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 bullish trends on 26 counters. They included SCI, Bharti Infratel, HDFC Bank, Amara Raja Batteries, Symphony, Lyka Labs, Star Paper Mills and Asian Hotels (West).

26 up

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.

As for Nifty50, the index appears to be respecting its near-term support at 11,850 level, as any selling around this level is being bought into.

“In case the index manages a sustainable trade above 11,932 on Wednesday, the strength may get extended up to 12,034 level. Supports are visible in the 11,850-11,833 range. A breach of the 11,833 level on a closing basis shall accelerate the selling pressure further,” he said.

The market trend is becoming uncertain, and uncertainties never help traders, said Shrikant Chouhan of Kotak Securities. “Unless Nifty crosses the 12,035 level, traders may remain cautious,” he said.

Understanding MACD

Tata Power

A close look at the stock chart of Tata Power shows whenever the MACD line has breached below the signal line, the stock has shown a downward momentum and vice versa. On Monday, the scrip fell 3.70 per cent lower at Rs 57.30 on NSE.


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