Hindalco, Titan, United Spirits get a 'Death Cross'; Tata Coffee has 'Golden Cross'

by 5paisa Research Team Last Updated: 2022-06-08T17:31:34+05:30

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. The ongoing war in Europe that has put global crude oil prices on the boil makes matters worse as it has significant implications for local companies that depend on fuel to run their business.

The benchmark indices skid again on Wednesday. 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 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 carry which of the two marks.

The Golden Cross stocks list, which had a crossover date over the last one week, has 15 names. These are: SML Isuzu, India Motor Parts, Key Corp, JHS Svendgaard, Bemco Hydraulics, Carnation Industries, Gowra Leasing, Bombay Cycle, HOV Services, MEP Infrastructure, Tata Coffee, Silver Oak (India), Asian Hotels (North), Duroply lndustries and Zenith Fibres.

Another way to look at these names is that 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.

On the other hand, the Death Cross basket has many more names including prominent names like Hindalco, Titan, IDFC, Minda Industries, Alok Industries and United Spirits.

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