These stocks could be ‘sell’ candidates on Williams %R chart

The Indian stock market is trying to bounce back from the lows after a sharp correction over the last month but faced another selloff on Wednesday that took the indices back to around 15% below their peak.

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

We picked a metric called Williams %R, which is a momentum indicator that can signal bullish or bearish trends for a stock.

Developed by Larry Williams, Williams %R is the inverse of the Fast Stochastic Oscillator. Its reading varies between 0 and -100, with 0 to -20 indicating an overbought range and -80 to -100 being seen as an oversold zone.

We ran an exercise to see which large cap stocks are in the bearish zone as per Williams %R. In particular, we looked at stocks with the William %R just crossing over -20 mark from the previous score at that level. We spotted around 55 such companies, mostly in the small and micro-cap space, which could be set for a trend reversal.

Filtering them from the top end of their market cap with valuation of over $1 billion, we get just two such names: telecom tower major Indus Towers and auto component maker Mahindra CIE Automotive.

Lower own the order there are stocks like Apar Industries, SAR Auto Products, Kritika Wires, Avro India, Priti International and Sadhna Broadcast.

Still lower down but those with a market cap of over Rs 50 crore, there are names like Apoorva Leasing, S M Gold, Shalimar Productions, Atam Valves and Simmonds Marshall.