Asian Paints shares break 6-year bullish trend; another 17% fall likely

Asian Paints stock was trading at 3-year lows, and had given a downside breakout on the monthly chart for the first time since May 2018; shows technical charts.

Asian Paints, India’s largest paint maker by market share, cracked over 9 per cent in intraday trading on Monday, reaching a low of Rs 2,506 on the National Stock Exchange, as the stock reacted to its 2024-25 (FY25) second-quarter (Q2) earnings. In doing so, the stock has tumbled over 26 per cent from its peak of Rs 3,395, registered on September 19, 2024, and is now at three-year lows.

 

On the earnings front, Asian Paints’ consolidated net sales declined by 5.3 per cent year-on-year (Y-o-Y) to Rs 8,003 crore in Q2FY25. Earnings before interest, tax, depreciation, and amortisation dropped by 27.8 per cent Y-o-Y to Rs 1,239.5 crore, down from Rs 1,716.2 crore. Profit after tax fell by 42.4 per cent Y-o-Y to Rs 694.6 crore.

 

Technically, a fall of over 20 per cent from its peak generally signals a shift in trend from positive to negative. Traders often interpret such a decline in a stock or index as a sign of a bear market.

 

Here's a detailed look at how Asian Paints stock is placed on the charts.

 

Asian Paints

Current Price: Rs 2,545

Downside Risk: 16.5%

Support: Rs 2,315

Resistance: Rs 2,750; Rs 2,930; Rs 3,030

 

With Monday’s fall, Asian Paints has seen a downside breakout (supertrend line) on the long-term charts for the first time since May 2018. The stock had been trending above its monthly supertrend line until last month. For the downside breakout to be confirmed, Asian Paints’ stock will need to close below Rs 2,630 at the end of November.

 

The long-term (monthly) chart shows that Asian Paints rallied nearly 193 per cent from Rs 1,160 in May 2018, following the breakout above its previous monthly supertrend line, reaching its peak in September of this year.

 

A downside breakout now suggests that the stock could face a subdued trend with limited upside potential. Also, Asian Paints is trading below both its 20- and 50-monthly moving average (MMA), indicating strong resistance at the Rs 2,925 and Rs 3,025 levels.

 

In the near term, the bias for Asian Paints is likely to remain bearish as long as the stock trades below the Rs 2,700 mark. On the downside, the stock appears to be on course to test its 100-MMA support at Rs 2,125. Interim support levels for the stock are expected around Rs 2,460 and Rs 2,230 — levels not seen in the past three years.