Are These Three Stocks In Trouble?

  • Stock Market Analysis

Today I will look at two equities in the paint sector. I have looked at this sector as all names in it seem to have reached a conflict point. Thus, I now expect most of them to have a pullback, after which they may resume their primary trend. The stocks being looked at are Asian Paints (NS: ASPN ) and Berger Paints (NS: BRGR ). I chose these two particular names as they are in the FNO space, hence they are tradeable in both directions. Moreover, at the end of the article, I have attached my pre-market YouTube video for today. If you cannot see the video link, then just YouTube my name for it. Coming to the video, I have looked at the Nifty and Bank Nifty as usual. However, I have also looked at Reliance Industries (NS: RELI ) as the company is having its AGM today. Hence, it is important we see how the stock’s chart is progressing and what it is indicating.

The first stock is Asian Paints. The stock from the past few weeks has had a great run. However, I now believe the upswing has come to a temporary pause. This is as this week, the stock formed a bearish chart pattern on the daily and weekly timeframes. Moreover, we see that the volume build-up of the equity has turned bearish. I say this as last week out of the total weekly volume only 23% of it was bullish in nature. This is an enormous drop from the last week when the bullish volume accounted for roughly 70% of the total volume.

It is now coming to the future price action. If the equity in the coming trading sessions were to break the support at Rs. 3,200, then this will trigger a decline until my quant support level at Rs. 3,080. I don’t think anybody ought to try short this stock past Rs. 3,080. This is as it is a very strong support zone. Hence, we will need a great deal of bearish strength to get a weekly close below it.

The second stock I am looking at is Berger Paints. Berger Paints is one equity that has also had a clean-up move from the end of July until the prior week. However, the rise came to an end this week due to very similar reasons as Asian Paints. I say this as the volume build-up also went from being severely bullish to being severely bearish. This, in turn, blew the gasket of the equity. Moreover, the equity also reached its 200-day moving average, which acted as the last nail in the coffin.

Now for the coming week. If the equity were to break the low of last week, then the first quant support is between Rs. 623 and Rs. 630. This is a tough support zone and may cause some stability to seep in. However, if we break this support zone, this shall trigger a much bigger downswing until Rs. 590. Hence, it will be very important for the stock to hold the support cluster between Rs. 623 and Rs. 630.

Overall, both the stocks mentioned above are showing clear signs of a pullback. However, I expect Asian Paints to be the stronger one down the road. This is as Asian Paint's medium-term trend is bullish, hence this can be regarded as a simple pullback. However, the same cannot be said for Berger Paints. This is as its medium-term trend is still neutral. I say this as it still has some major hurdles to cross in the weekly and monthly timeframes. Lastly, do watch my YouTube video attached below if you are interested in understanding how I expect Reliance Industries and the indexes to perform.

Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Thus, you must trust your analysis and judgment before making investment decisions. The report provided is for informational purposes only and should not be interpreted as a proposition to buy or sell any securities.

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