Cipla, Tata Power, Marico in bullish zone by MACD-signal line crossover

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 rose around 0.5% on Monday.

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

One such parameter is 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.

That’s 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 bullish signal, we get a list of 18 stocks within the Nifty 500 pack. A little over half of these are from the large cap segment and the other half spread across small and mid-cap space.

In the large cap space, Cipla, Tata Power, Marico, IndusInd Bank, Macrotech Developers, P&G Hygiene, United Breweries, HDFC Asset Management, Laurus Labs and Aditya Birla Capital are showing bullish signs. These are companies with a market cap over Rs 20,000 crore.

Lower down the order, there are names like IIFL Finance, Chambal Fertilisers, GR Infraprojects, Rain Industries, V Mart Retail, EPL, Engineers India and SpiceJet.

There are around 170 other small and mid-cap names showing the same bullish signal. Some of the prominent names here include Greenpanel, Kaveri Seed, Neogen Chemicals, RateGain, HMT, Bannari Amman, Max Ventures, Stylam, Reliance Infra and Honda India Power.