Bull markets, like the one we are witnessing, are typically characterised by rising investor confidence, widespread optimism, and a surge in stock prices. The Nifty 50 is heading higher to new highs of 26,000. Many investors chase high returns during such periods, scouring for the next big winner.
However, not all stocks thrive in bullish markets. Some stocks exhibit technical weaknesses even when the broader market is on an upswing. Identifying these laggards can be crucial for avoiding potential losses in an otherwise bullish phase.
One of the most reliable tools for identifying stocks that could underperform or even drop is the Death Cross—a technical pattern that signals a bearish shift in momentum.
The Death Cross is a bearish technical pattern that occurs when a stock’s short-term moving average, typically the 50-Day Exponential Moving Average (DEMA), crosses below its long-term moving average, the 200DEMA. This crossover is a sign that selling pressure is intensifying and often precedes a period of declining prices.
While many traders rely on the Death Cross on daily charts, it might be better to analyse this pattern on weekly charts to capture long-term trend shifts.
The following three stocks have formed the Death Cross on weekly charts, signalling weakness despite the broader market’s bullish momentum.
Once a strong contender in the telecommunications sector, Vodafone Idea has seen its fortunes wane in recent years. The merger of Vodafone India and Idea Cellular was aimed at creating a telecom giant, but the combined company has struggled with mounting debts and intense competition.
From a technical perspective, the stock has been under pressure for years. On the weekly chart, Vodafone Idea experienced a Death Cross in March 2016, when its 50-Week EMA dropped below the 200WEMA, signalling a major downtrend. Since then, the stock has remained bearish, with little evidence of a sustained reversal.
Vodafone Idea’s stock surged from a low of ₹5.70 in 2023 to ₹19 in 2024—an increase that excited some bulls—but this rise appears to be nothing more than a temporary bounce. The stock recently formed a classic bearish indicator double-top pattern with a neckline breakdown that confirms bearish control over the trend.
The Death Cross and the double-top pattern make Vodafone Idea a risky proposition in the current market environment. While some investors may view it as a turnaround story, the charts suggest otherwise. For those seeking long-term growth in a bullish market, Vodafone Idea is best probably avoided.
At its peak, Yes Bank was considered one of India’s premier private sector lenders, attracting institutional and retail investors. However, a series of missteps, including poor loan management and regulatory issues, has led to its decline, leaving investors hoping for the company to recover to its former glory days.
From a chartist’s perspective, Yes Bank has been in a long-term bearish trend ever since it experienced a Death Cross on the weekly chart. The stock made an attempt to rise above the 200WEMA but failed to sustain momentum. This failure could be attributed to long-term holders opting to exit positions near this key resistance level.
On the positive side, there is some hope. The 50WEMA has begun to slope upward, indicating a potential recovery. However, no long-term reversal can be confirmed until the 50WEMA crosses above the 200WEMA.
For now, Yes Bank remains in bearish territory—a stock to avoid especially in a bullish market where stronger opportunities exist.
Bata India, a household name in India and a trusted footwear brand, has long been viewed as a blue-chip stock in Indian markets. Its consistent performance, coupled with strong fundamentals, made it a favourite among both investors and analysts. However, recent technical signals paint a different picture.
On the weekly chart, Bata India has experienced a Death Cross, signalling the end of its long-term bullish trend. This is a significant shift, as the stock has now formed a series of lower highs and lower lows, a classic bearish pattern according to Dow Theory.
With the breakdown of its bullish structure and the formation of a clear downtrend, Bata India no longer looks like a safe investment in the current bullish market. The technical weakness seen on the chart suggests that the stock may continue to potentially face selling pressure, making it another stock to avoid for now.
Even strong, widely tracked and owned stocks can falter, particularly when their technical charts suggest underlying weakness. Vodafone Idea, Yes Bank, and Bata India are all experiencing long-term bearish trends, as the Death Cross and other technical signals indicate. As the broader market continues its bullish run, these stocks may struggle to keep pace and should be cautiously approached.
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Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, consult your advisor. This article is strictly for educational purposes only.
Brijesh Bhatia has over 18 years of experience in India's financial markets as a trader and technical analyst. He has worked with the likes of UTI, Asit C Mehta, and Edelweiss Securities. Presently, he is an analyst at Definedge.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article. However, clients of Definedge may or may not own these securities.
