NEW DELHI: As the Nifty50 index ended 68 points, or 0.63 per cent, lower at 10,628 on Monday, momentum indicator moving average convergence divergence, or MACD, signalled downward crossover on as many as 85 counters on NSE.The MACD is known for identifying trend reversals.Among the stocks that saw bearish crossovers were Axis Bank, Edelweiss Financial Services, Future Enterprises, Vijaya Bank, Havells India, RBL Bank, Jagran Prakashan, Network18 Media Investments, Minda Corporation, Leel Electricals and Dr Reddys Labs.Some of these counters have also been witnessing strong trading volumes, adding further credibility to the emerging trend.Other stocks that witnessed bearish crossovers included GMR Infrastructure, Vikas Ecotech, Bharat Electronics, RattanIndia Power, United Breweries and Welspun Enterprises.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 average, called the signal line, is plotted on top of the MACD to reflect buy or sell opportunities.
When the MACD slips 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 a sufficient indicator 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 trends.Retail investors should consult financial experts before buying or selling stocks based on such technical indicators.Meanwhile, MACD charts also showed 26 stocks witnessed bullish crossovers on NSE, giving buy signals.
They included Firstsource Solution, Bajaj Auto, Cerebra Integrated Tech, Va Tech Wabag, IIFL Holdings, Tips Industries, Future Lifestyle, HPL Electric Power and Rama Steel Tubes.On Monday, the Nifty50 pack formed a Bearish Engulfing Pattern on the daily chart.
A breach of the 10,600-620 range in the coming session may further weaken the technical outlook for the index.On the other hand, the 10,770 level proved a strong hurdle and may remain so over the next few sessions.Over the past three sessions, the Nifty50 failed to cross multiple resistance zone between 10,780 and 10,790 levels, which now remains a crucial hurdle, said Rajesh Palviya, Head Technical Derivatives Analyst at Axis Securities.Understanding MACDA close look at the chart of Havells India shows whenever the MACD line has crossed below the signal line, the stock has always shown a downward momentum and vice versa.
Shares of the company closed 0.40 per cent down at Rs 537.25 on Monday, June 4.