Britannia stock down 26% from peak, tests 15-year support; Buy or Sell?

In the past two occasions, Britannia share price more-than-doubled after the stock tested its super trend line support on the monthly scale. Will history repeat itself? Chart check here

Britannia stock has plunged nearly 27 per cent from its all-time high in a matter of just three months. The stock had registered a high of Rs 6,470 on October 1, 2024 on the BSE; post which the stock has witnessed a steady decline on the bourses.  In doing so, Britannia stock has broken and is seen trading below all the key moving average - the short-term 20-DMA (Daily Moving Average) and also the long-term 200-DMA.  More importantly, the stock is now seen testing the super trend line support on the monthly scale for the first-time since May 2022. The super trend line support for Britannia stock stands at Rs 4,701. The long-term chart shows Britannia has consistently traded above this super trend line for the last 15 years, post the breakout in July 2009. Post the breakout, the stock has zoomed 4,331 per cent or grown 44.3 times in the last 15 years.  The long-term chart shows that in the last two occasions i.e. after Britannia share price had tested support around the monthly super trend line, the stock has bounced back sharply and more-than-doubled in the ensuing period.  For instance, in March 2022, the stock hit a low of Rs 2,935 as it tested its monthly super trend line support for three straight months. Thereafter, the stock soared over 120 per cent to hit its recent summit in October 2024. 

 

 

  Similarly, during the Covid-19 panic sell-off Britannia had plunged to its super trend line support, and hit a low of Rs 1,956 in March 2020. The stock thereafter rallied to a high of Rs 3,997 in September 2021 - up over 104 per cent.  Analysts have taken a 'Çautious' stance on the FMCG sector amid concerns over lower spending. Brokerage firm Axis Securities in Britannia Q2FY25 results review had downgraded stock from 'Buy' to 'Hold' as the company's revenue fell short of expectations due to a weak demand environment.  Analysts at Axis Securities cite rising housing costs coupled with modest wage growth as one of the key reasons for a subdued demand environment. That apart, rising prices of raw materials, especially palm oil is expected to weigh on Britannia's top line growth and margin.  However, the given the 15-year historical trend, wherein the stock price of Britannia has respected the monthly super trend line. Will history repeat itself, and can Britannia bounce back stronger from present levels?  Here's what technical charts predict.  Britannia Industries  Current Price: Rs 4,896  Upside Potential: 17.4%  Downside Risk: 30.5%  Support: Rs 4,701; Rs 4,260; Rs 4,100  Resistance: 5,070; Rs 5,400  At present levels, Britannia is seen trading with a weak bias on the daily and the weekly scale; but in oversold zone. Hence, some pull-back from present levels cannot be ruled out.    As such, the 20-DMA at Rs 4,900 and the 100-WMA (Weekly Moving Average) at Rs 4,970 are likely to act as immediate resistances; above which the super trend line resistance on the daily scale at Rs 5,070 holds the key.  Britannia will need to break and trade consistently above the Rs 5,070 levels for a pull-back rally to emerge. As such, the stock can potentially bounce back to Rs 5,400 levels; above which a spurt to Rs 5,750 seems likely.  On the flip side, below Rs 4,701 the stock is likely to test its 200-WMA, which stands at Rs 4,260 levels; below which near support stands at Rs 4,100. CLICK HERE FOR THE CHART  Having said that, in case, the stock gives a monthly close below Rs 4,700, it will signal a significant change in trend. In which case, Britannia stock can slide all-the-way to Rs 3,400 levels over the next few months.