As Nifty slips, which stocks are carrying ‘Golden Cross’ and ‘Death Cross’ marks?

by 5paisa Research Team Last Updated: Dec 11, 2022 - 06:52 am 29.3k Views
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The Indian stock market is reeling under the impact of liquidity tightening and rate hikes initiated not just in the domestic market but also in the US. Besides, the ongoing war in Europe has put the global crude oil price on the boil. This has significant implications for local companies that depend on fuel to run their business.

The benchmark indices skid again on Wednesday and are now trading at levels last seen in mid-March 2022 with a correction of around 15% from the peak. The Nifty fell below 16,000 before recovering to close the day at 16,167.

The bloodbath in the mid and small caps has been much more brutal with several companies seeing their share price decline by 30% or more from their recent peaks.

Investors looking at charts and price and volume patterns have various parameters to decide whether a stock is ripe for the pick or is best left untouched.

One of the technical marks to pick or move away from a stock is to see which ones have a ‘golden cross’ and which others have the ‘death cross’ etched on their back. Both use the concept of moving averages to show trend lines on what the charts foretell about the possible future trajectory of a stock.

The Golden Cross strategy picks stocks whose simple moving average, or SMA, for the last 50 days has crossed above their SMA for 200 days. This is seen as a critical technical indicator for stocks that could be in the bullish zone.

On the flip side, the Death Cross strategy picks stocks whose 50-day SMA has sunk below their 200-day SMA. This is seen as a critical technical indicator for stocks that could be in the bearish zone.

We ran an exercise to see which stocks within the Nifty pack of 50 companies carry either of the two marks.

The Golden Cross stocks list has 19 names including UPL, Tata Steel, JSW Steel, Adani Ports, Cipla and Maruti Suzuki. Others in the list are ITC, Reliance Industries, Bharti Airtel, Coal India, NTPC, ONGC, SBI, Power Grid, Tata Motors, Titan, Hindalco, Infosys and Sun Pharma.

Another way to look at these names is to see which of these companies have achieved the ‘crossover’ more recently as this could indicate they are still in the way up as against others that could have seen the crossover a few weeks back and now are in the reversal zone.

Here we get names like UPL, Tata Steel, JSW Steel, Adani Ports, Cipla that have seen the crossover since January 1, 2022.

On the other hand, the Death Cross basket has many more large names, 29 in total. Of these, two out of every three names have had a crossover in 2022.

Among those that had the crossover date since April 1 include Axis Bank, TCS, Apollo Hospitals, L&T, ICICI Bank, Grasim, Tech Mahindra, HCL Technologies and Bajaj Finserv.

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