ONGC, SRF, Welspun among stocks in bearish zone by MACD-signal line crossover

Indian Market
by 5paisa Research Team Last Updated: Dec 14, 2022 - 05:36 am 22.5k Views

The Indian stock market has been consolidating for the last one month after sinking nearly 15% from its peak that it failed to breach early this year. The benchmark indices declined 0.2% on Tuesday, but bounced back on Wednesday and Thursday.

Investors looking at the charts track various patterns and signals as trigger points to decide on betting on stocks.

One such parameter is the moving average convergence divergence (MACD), a momentum indicator that twines two moving averages of a stock’s price. It is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. This gives a MACD line.

If we plot a nine-day EMA of the MACD, also known as the signal line on top of the MACD line, one can infer if it’s a buy or sell signal. When the stock’s MACD line crosses above its signal line it indicates a time to buy and could be a trigger to sell if the MACD crosses below the signal line.

This is not all. The speed of crossovers can also show whether it is a buy or sell signal.

If we use this parameter to pick stocks that could be showing a bearish signal, we get three stocks within the Nifty 500 pack. Two of these are from the large cap segment and the third is from the mid-cap space.

In the large cap space, state-controlled oil and energy major Oil & Natural Gas Corporation (ONGC) and chemicals firm SRF figure in the list of stocks showing bearish signs. These are companies with a market cap over Rs 20,000 crore.

Lower down the order, there is Welspun Corp in the mid-cap basket.

There are around 69 other small and mid-cap names showing the same bullish signal. Some of the prominent names here with a market cap of over Rs 500 crore include Apollo TriCoat Tubes, Healthcare Global, Jain Irrigation System, Surya Roshni, Bhagiradha Chemicals, TCPL Packaging, DCM Shriram Industries, Summit Securities, Gallantt Metal and Radhe Developers.

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