Dabur: More weakness to follow?

Dabur India Limited is one of the most popular fast-moving consumer goods (FMCG) companies of India, operating in various product categories, such as hair care, oral care, healthcare, skincare, home care, and foods.  

With a market cap of Rs 99,486 crore, it is a well-established company in the FMCG segment of India. The company has strong financials but has reported less-than-average industry revenue growth and average industry net profits in the past five years.  

The stock has also underperformed as it delivered a mere 5.51 per cent in 2021 and negative 7 per cent returns in one month. This is a weak performance from a company like Dabur and it has been under par with its peers.   

On the technical chart, we have witnessed a Head & Shoulders pattern at the top, which indicates a downtrend. The stock, after hitting its all-time high of Rs 660 on September 20, has fallen sharply and now, plunged over 14 per cent. It has broken the neckline of the Head & Shoulders pattern and sharply moved downwards. The expected fall of the stock from its neckline is about 13 per cent, out of which, it has already slipped about 3 per cent. Thus, the stock is expected to continue its bearish trend and a further 10 per cent fall is expected in the times to come. To indicate the bearish nature of the stock, the trend-strength indicator ADX is rising steadily above 25. The RSI too has slipped below 37 and suggests weak strength in the stock. The stock is already trading below its short as well as long-term moving averages and shows no signs of reversal.   

With the absence of positive price action and good volume, the stock looks nowhere to be bottoming out, and thus, more falls are expected. Thus, traders should keep in mind the bearish nature of the stock and initiate trades accordingly.