By Kiran Jani
The start of 2024 was strong for Nifty50, with the index rallying to new highs. Subseuqnetly ofcourse, there was sharp profit booking in the second half, leading to a notable retracement from its all-time high. Over the last 14 months, Nifty50 has delivered a modest return of just 5.48%, reflecting a period of consolidation and sectoral divergence. Meanwhile, market-favourite paint stocks have remained clear underperformers, exhibiting sustained bearish momentum. Asian Paints and Berger Paints have faced significant drawdowns, posting negative returns of 34% and 19%, respectively.
Sources: Investing.com
The price action in both stocks suggests the possibility of a trend reversal, with technical indicators hinting at potential upside opportunities. Investors and Traders should closely monitor key support and resistance levels and breakout confirmations.
1. Asian Paint Limited – Bullish Reversal pattern
Asian Paints has declined 32% since early 2024, correcting from ₹3,393 in September to a low of ₹2,208—its 2021 level. The stock has rebounded from strong long-term support at ₹2,200, signalling a potential trend reversal. Watch for breakout confirmation and bullish momentum indicators.
Key technical indicators supporting the Bullish Outlook:
- Falling wedge Pattern – The stock has formed a falling wedge, a classic bullish reversal pattern signalling a potential breakout.
- Volume Surge – Recent price and volume movements suggest increasing investor participation, reinforcing the bullish sentiment.
- RSI in Bullish Divergence —The 14-period RSI is trading into an extreme oversold zone but has also formed a bullish divergence.
Source: Investing.com
Outlook – Asian Paint
Asian Paints has been in a corrective phase, dropping from ₹3,393 to ₹2,200 over the past six months. However, forming a falling wedge pattern and bullish RSI divergence suggests a potential trend reversal. Multiple technical signals indicate an impending breakout, making this a stock a candidate for potential upside in the coming weeks.
2. Berger Paint Limited – Bullish Reversal pattern
Berger surged 43% from June 2024 before correcting from its ₹630 high in September. Subsequently it retested support near the same level. However, the daily chart now indicates a potential bullish reversal, supported by key technical indicators such as bullish RSI divergence, a strong demand zone, and a possible breakout from consolidation. Traders should watch for confirmation signals to validate the upside move:
- Inverted head and shoulder—The stock price forms a bullish reversal pattern, signallinga bullish reversal.
- Volume Surge – Recent price and volume movements suggest increasing investor participation, reinforcing the bullish sentiment.
- RSI in bullish zone—The 14-period RSI is trading into abullish zone, reinforcing the probability of a trend reversal.
Source: Investing.com
Outlook – Berger Paint
Berger Paints has corrected from ₹630 to ₹440 over the past four months (September to December 2024). However, the stock is now forming a higher-top, higher-bottom pattern, indicating accumulation and a potential trend reversal from the recent ₹440 low. A breakout above key resistance levels, supported by increasing volume and bullish momentum indicators, could confirm potential further upside.
Paint stocks: Correction phase ending, poised for a strong upside
Despite recent corrections, the paint sector shows strong technical signals for a potential rebound. Asian Paints and Berger Paints stand out with bullish reversal patterns, indicating renewed strength.
- Asian Paints is forming a bullish reversal pattern, confirmed by a falling wedge breakout, rising volume, and strong RSI momentum.
- Berger Paints displays an inverted head and shoulders pattern, with RSI entering the bullish zone, signaling a possible trend shift.
While mid-cap and small-cap stocks remain in a downtrend, large-cap stocks are trading in strong accumulation zones with technical breakouts, making them potential candidates for upside movements. Readers should watch key levels and confirmation signals as the sector gears up for a promising future.
Disclaimer
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, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
As per SEBI guidelines, the writer and his dependents may or may not hold the stocks/commodities/cryptos/any other assets discussed here. However, clients of Jainam Broking Limited may or may not own these securities.
Kiran Jani has over 15 years of experience as a trader and technical analyst in India’s financial markets. He is a well-known face on the business channels as Market Experts and has worked with Asit C Mehta, Kotak Commodities, and Axis Securities. Presently, he is Head of the Technical and Derivative Research Desk at Jainam Broking Limited.
Disclosure: The writer and his dependents do not hold the stocks discussed here. However, clients of Jainam Broking Limited may or may not own these securities.
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