As the 50-share Nifty index of NSE scaled a fresh closing high on Monday, 70 stocks witnessed an upward crossover or bullish crossover on the MACD chart, indicating their readiness for further rise.

MACD, or moving average convergence divergence, is a momentum indicator known popularly for signalling trend reversals.

Among the stocks that saw bullish crossovers were Indiabulls Real Estate, Sun Pharma, Tech Mahindra, Bhansali Engineering, PTC India, HEG, Tata Coffee, BF Utilities, Jindal Stainless, City Union Bank, IPCA Labs, Rossell, PPAP Automotive and Manaksia.

Some of these counters have also been witnessing strong volumes, adding further credibility to the emerging trend. Other stocks that saw bullish crossovers included Mangalam Drugs, The Mandhana Retail, Mold-Tek Technologies, Akzo Nobel, Solar Industries, Gillette India and Varun Beverages.

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 crosses above the signal line, it gives a bullish signal on the charts, indicating that the price of the security may experience an upturn and vice-versa.



However, MACD alone may not be sufficient to help take an investment call.

Traders should also make use other indicators like relative strength index (RSI), Bollinger Bands, Fibonacci Series, candlestick patterns and Stochastic to confirm any trend.

Retail investors should consult a financial expert before buying or selling a stock based on such technical indicators.

The MACD charts showed 25 stocks witnessed a bearish crossover on NSE, giving a ‘sell’ signal. They included Hindustan Unilever, Adani Transmission, Tata Elxsi, Bombay Burmah, KCP, Dhanuka Agritech, Prabhat Dairy, Precision Camshaft and Nilkamal.



The 50-share Nifty index of NSE settled 40.60 points, or 0.39 per cent, higher at 10,363 on Monday, while the BSE Sensex gained 108 points, or 0.33 per cent, to 33,266.

“The Nifty50 extended its upward trend on Monday forming higher highs and lows compared with the previous session and formed a bullish candle, resembling the Doji formation, carrying shadows on either side, which indicates indecisiveness among the participants. For the forthcoming session, if the Nifty50 manages to surpass the 10,385 level, then it is likely to extend its upward momentum towards 10,400 and 10,430 levels. Intraday support is at around 10,350, and any violation of this support will help the bears take control for a correction towards 10,300 and 10,270 levels.”

Chandan Taparia, Derivatives & Technical Analyst, Motilal Oswal Financial Services said, “The Nifty50 formed a small-bodied candle, but as long as it doesn’t negate the positive momentum, the trend could remain positive. Now, it has to continue this formation to extend this move towards 10,400 and then 10,500 levels, while on the downside, support exists at 10,300 and then 10,250 levels.”

Understanding MACD



A close look at the chart of Bhansali Engineering shows whenever the MACD line has crossed above the signal line, the stock has always shown an upward momentum. Shares of the company closed nearly 10 per cent higher at Rs 132.40 on October 30.