Big FMCG Counter Breaks ‘Key’ Support; ‘Begins Downtrend’!

  • Stock Market Analysis
Aayush Khanna/Investing.com - Investing.com

The Nifty FMCG index ended the session 0.53% up at 44,456.9 on Tuesday, while one of its constituents - Britannia Industries (NS: BRIT ) was the top-second loser of the index, falling 2.02% to 4,317.6. It contributed a 0.12% cut to the index rally. 

Britannia Industries is a large-cap FMCG (fast-moving consumer goods) player with a market capitalization of INR 1,05,509 crores and currently trades at a P/E ratio of 69.2, compared to the sector’s average of 48.59, making it a bit more expensive than the industry average. The company is yet to deliver its Q3 FY23 earnings report, however, the previous quarter was a good one, as it reported an 18% QoQ jump in revenue to INR 4,432.91 crores while net profit jumped 46.16% to INR 493.28 crores, the highest since the September 2020 quarter.

Image Description: Daily chart of Britannia Industries with volume bars at the bottom

Image Source: Investing.com

Today, the share price of Britannia Industries ended up giving a breakdown below the lower trendline support of a Rising Wedge pattern on the daily chart. A breakdown below the lower trendline of this pattern is a bearish signal for investors as it is known to reverse the prior uptrend to a downtrend. It is somewhat similar to a triangle pattern but both the trendlines of a wedge pattern points toward the same direction, unlike any triangle pattern.   

Despite a good sectoral breadth, as indicated by a 0.53% uptick in the Nifty FMCG index, Britannia Industries’ shares took a decent hit, depicting a weak relative strength of this counter. This is further strengthening the bearish view on it. 

As the stock has been able to maintain the selling pressure by the session end, leading to closing below the lower trendline, the breakdown is now confirmed. The stock now holds the potential to travel to the nearest target of around INR 4,150 in the next few weeks. As long as the stock isn’t making a new high above INR 4,444 (previous peak), the short-term trend should be deemed negative.

Volume on today’s breakout is not super high, but still, it's outpacing the 10-day average volume of 1.84 lakh shares by 227% to 6.04 lakh shares in today’s session. However, some surprises might come on tomorrow’s budget day which could reverse the trend, but that’s just a probability and the current trend on the chart should be given a higher weightage 

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  • Vikky Donar @Vikky Donar
    sir g ur analysis r alws grt
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      @Vikky Donar My readers are also great :)
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  • Richa Pandey @Richa Pandey
    Thanks
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    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      @Richa Pandey You're welcome :)
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  • namami ghosh @namami ghosh
    thanks a ton
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    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      You're welcome, Namami :)
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  • namami ghosh @namami ghosh
    thank you
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  • Surinder Singh @Surinder Singh
    not impressive! closing is too far from the low. Thus, it can be moved upward tomorrow.
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  • Ranjit Kumar Jain @Ranjit Kumar Jain
    adani brittania khata hai
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  • xtemp abc @xtemp abc
    Tusi great ho Aayush ji👍
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    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      thanks :)
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  • NIGAM JOGADIA @NIGAM JOGADIA
    THANK YOU
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      You're welcome, Nigam :)
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    Ok
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