Over the past three days, it is being observed that there was a sharp drop in the Nifty50 that has pushed the index below the 10,250 mark, making traders wonder whether it is headed for sub-10,000 level. But technical charts are giving mixed signals across counters. At Monday’s close, momentum indicator moving average convergence divergence, or MACD, reflected weak bias on as many as 46 counters on NSE, signalling a major downturn in these stocks. The charts also showed some 19 stocks were poised for a rally.
Such counters have also been witnessing strong trading volumes of late, adding further credibility to the emerging trend. Out of stocks that looked weak were largely NBFCs, small banks and companies from the construction, infrastructure and real estate sectors. They include NCC, Indiabulls Real Estate, RBL Bank, HDFC, Bharat Financial, AU Small Financial, Ambuja Cements, MEP Infrastructure and Heidelberg Cement, among others. Sugar stocks Bajaj Hindustan and Dhampur Sugars, healthcare stocks Marksan Pharma and Dr Lal Pathlabs and consumer stocks Bata India, Kansai Nerolac and Manpasand Beverages too looked weak on the technical charts.
Moving Average Convergence Divergence is known for signalling trend reversal in a traded security or index. MACD 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. Nineteen stocks, including IOC, Biocon, Power Grid, Allcargo Logistics, DCM Shriram and Ajanta Pharma, showed bullish crossover on the daily charts. Coffee Day Enterprises, Va Tech Wabag, Tube Investments, V Mart Retail and Birla Corporation were among the stocks that looked firm