But momentum indicator Moving Average Convergence Divergence, popularly known as MACD, shows as many as 68 stocks on NSE witnessed bearish crossovers on Monday, signalling a possible bear grip on these counters.
Stocks that witnessed bearish crossovers with strong volumes on Monday included Subex, Axis Bank, SAIL, Jaypee Infratech, Bharti Airtel, Jain Irrigation, Biocon, Hindustan Unilever, MTNL, Castrol India, Jammu & Kashmir Bank, Wockhardt and Kopran.
“Considering the broader chart pattern, where 10,080 is the long-term uptrending channel resistance, we prefer being cautious on rise in the index. However, successful closing above 10,080 may unfold the next leg of upmove towards the 10,135 mark,” Stewart & Mackertich Wealth Management said in an analysis.
Other stocks on the list included Dalmia Bharat Sugar, Liberty Shoes, BAG Films, Rajshree Sugars, Nesco, Akzo Nobel India and GlaxoSmithKline Consumer Healthcare.
DON'T MISS TODAY:
Popular in Markets
►Cochin Shipyard IPO kicks off: Should you buy?
►View: Show some guts, Mr Patel; cut rates by 50 bps
Technical indicator relative strength index, or RSI, of the Nifty is currently quoting at 70. RSI is based on per day rise of stocks or index in the past 14 days. Technical analysts say when the RSI level tops 70, it signals overbought condition in the market. Within Asia, besides Hong Kong, India is the other key market where the RSI has crossed the 70 mark. In last 10 years, the RSI has consistently stayed above 70 on two occasions. It was at 79 before the sharp correction in 2015 and at 79.4 before the market collapse in 2008.
The Nifty50 has to continue to hold above 10,020 to witness a fresh rally towards the 10,250 levels while support has shift higher to the 9,950 level, says Chandan Taparia, Derivatives & Technical Analyst, Motilal Oswal Financial Services.
The index has been forming higher tops and higher bottoms on the weekly chart. Till it holds above the 9,928 mark, the broader trend may remain intact and the Nifty50 may head towards 10,250 and higher, he said.
The 50-share Nifty settled the July series with monthly gains of 5.84 per cent.
MACD is one of the most effective trend-following momentum indicators used to spot a change in the short-term trend of the market.
The MACD indicator alone may not be sufficient to take an investment or trading call. Traders should make use of other indicators such as Fibonacci series, RSI, candlestick patterns, Bollinger Bands and stochastic to confirm any trend.
It is advisable to consult a financial expert before taking a call to buy or sell a stock based on the behaviour of these technical indicators.
Meanwhile, MACD charts also showed that 32 stocks witnessed an upward crossover or bullish crossover on NSE on Monday, indicating that they have begun an upward journey.
In a bearish crossover, the MACD value will always be lower than the signal line. For example, on the Axis Bank counter, the MACD value is at 4.46 and the signal value at 4.90. Jaypee Infratech’s MACD value is at 2.01, which is below its signal line value of 2.07.
Understanding MACD
A close look at the chart of Jaypee Infratech shows whenever the MACD line crossed below the signal line, the stock always showed a downward momentum and vice-versa.
The last downward crossover was recorded on Monday, when the Nifty closed in the green. Shares of Jaypee Infratech closed 3.10 per cent down at Rs 21.85 in the previous session.
