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    Over 300 stocks on BSE gave bullish crossover based on MACD; time to buy?

    Synopsis

    Stocks which have witnessed bullish crossover with strong volumes include names like Eicher Motors, Maruti Suzuki, SRF, L&T, HDFC, PVR and Supreme Industries.

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    MACD is one of the most effective momentum indicators that can be used to spot a change in the short-term trend of the market.
    NEW DELHI: The Moving Average Convergence and Divergence, popularly known as MACD, showed as many as 328 stocks on BSE have witnessed upward crossovers or bullish crossovers on Wednesday, according to data compiled from EconomicTimes.com.

    MACD is one of the most effective trend-following momentum indicators, which can be used to spot a change in the short-term trend of the market.

    The Nifty50 reclaimed its crucial support level of 8,100 while S&P BSE Sensex gained momentum ahead of September quarter GDP data, which will be released later on Wednesday. The Nifty50 has been gaining momentum in last three sessions after a sharp drop that took the index below the 8,000 mark.

    “The Nifty50 continued to form higher highs and higher lows, but the absence of followup buying and selling pressure at higher levels has halted the momentum,” Chandan Taparia, Derivatives & Technical Analyst - Equity Research at Anand Rathi Financial Services, told ETMarkets.com.

    “The Nifty50 may drift downward towards 8,080 and 8,050 levels in case the momentum weakens, but if it holds above the 8,200 level, it might result in a fresh move towards the 8,300 level over the next few sessions,” Taparia said.

    Stocks that have witnessed bullish crossovers with strong volumes include Eicher Motors, Maruti Suzuki, SRF, L&T, HDFC, PVR, Supreme Industries, CEAT, Borosil Glass, BEML, Cummins India and ZEE Entertainment, among others.

    Track live charts of stocks recording fresh bullish crossover here:

    image (28)


    In MACD, two exponential moving averages i.e. 12-day and 26-day, of prices are used to indicate the direction and momentum of the market, which can be either strong or weak. A nine-day exponential moving average is used as a line to generate a buy or sell signal.

    To understand MACD, we should understand what is a crossover? When the MACD line falls below the signal line, it is a bearish signal, which indicates that it may be time to sell.

    On the contrary, when the MACD rises above the signal line, the indicator gives a bullish signal, suggesting further upside in the stock.

    To define a bullish crossover, the MACD value will always be higher than the signal value. For example, in Eicher Motors, the MACD value is -919.26 and the signal value is -932.88. Another company, Aarti Industries’ MACD value is 4.51, which was above its signal line value of 4.05.

    However, an MACD indicator alone may not be sufficient to take an investment or trading call. Investors should use other indicators to take decisions to confirm such a move.

    Although MACD is effective, it is not complete in itself. Traders should make use of other indicators such as RSI, Fibonacci series, candlestick patterns, Bollinger Bands and stochastic to confirm any trend.



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    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

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