Bluechip Stocks To Buy That Are Trading Below Their 200-Day Moving Average

Markets have seen a sharp recovery in the last few days. Despite that there are some good quality stocks that are trading below their 200-day moving average. Some of these stocks are good to buy after the sharp fall in their stock prices.

Stocks trading below 200 DMA

Company name	Current market price	200 day moving average
TCS	3375	3527
Infosys	1526	1653
Asian Paints	2844	3065
JSW Steel	538	651
Nestle India	17706	18081
Tata Steel	1046	1186
Oracle Financial	3286	4020
Pidilite	2264	2307
HDFC AMC	1835	2344
Tata Communications	1004	1211

The significance of 200 day moving averages

Technical analysts look at the 200 day moving average in a stock to determine the trend in a stock. If the stock is way below that, the trend on the stock has clearly been bearish. However, technical analysis cannot be done in isolation. So, if the stock has been falling below the 200 day moving averages, there could be fundamental reasons for the same. For example, quarterly numbers could be bad or there could have been changes impacted at the company level. Apart from the 200 day moving average, technical analysts also look at shorter-term moving averages to show not only the market trend but also to assess the strength of the trend as indicated by the separation between moving average lines. For example, it is not uncommon to compare the 200 day moving average to the 50 day moving averages. We would suggest that before you buy a stock look at the fundamental as well as technical side of the stock - never in isolation.

Should you buy the list of 10 stocks highlighted above?

We believe that some of the stock listed above are fundamentally strong. Take the case of Infosys. The stock has fallen from levels of more than Rs 1953 in early Jan, 2022 to the current levels of Rs 1526. There are worries that IT growth would slowdown and this has led to some selling in frontline IT Stocks. However, there has been no management commentary indicating a slowdown in client spending. Another stock that is worth buying is the stock of Oracle Financial Services. The shares of the company at Rs 3286 is way below the 200 day moving average of Rs 4020. One of the reasons to buy the stock is that the dividend is good of Rs 190 per share, translating into a yield of 5.41%. The stock is also quoting at an attractive price to earnings of 15 times, making it among the cheapest stocks in the IT Space. Some of the stocks are also good to buy, for example Asian Paints. However, the problem is that for the next few quarters, we might see a very tepid performance from the company, given that inflation may wreck margins. The same goes for the stock of Pidilite Industries.

Disclaimer

Investing in stocks is risky. Neither the author, nor Greynium Information Technologies Pvt Ltd, should be held responsible for losses incurred based on the decision in the article. Markets have turned extremely volatile and hence caution is advised before investing. The author owns shares in Oracle Financial Services Ltd.