Central Depository Services (India) Ltd Faces Bearish Momentum Amid Technical Downturn

Technical Momentum and Indicator Analysis

CDSL’s current price stands at ₹1,434.30, up from the previous close of ₹1,415.60, with intraday highs reaching ₹1,451.70 and lows at ₹1,417.00. However, this short-term uptick belies the broader technical picture. The stock’s moving averages on the daily timeframe have turned bearish, indicating downward pressure on price momentum. This is corroborated by the weekly and monthly Moving Average Convergence Divergence (MACD) readings, which remain bearish and mildly bearish respectively, suggesting that the stock’s momentum is weakening over both intermediate and longer-term horizons.

The Relative Strength Index (RSI) on both weekly and monthly charts currently shows no definitive signal, hovering in neutral territory. This lack of momentum confirmation from RSI implies that while the stock is not yet oversold, it is also not exhibiting strong buying interest, leaving room for further downside risk if selling pressure intensifies.

Bollinger Bands provide additional insight, with the weekly indicator mildly bearish and the monthly indicator firmly bearish. This suggests that price volatility is skewed towards the downside, and the stock is trading closer to the lower band on a monthly basis, a technical warning sign of potential further declines or consolidation at lower levels.

The Know Sure Thing (KST) oscillator, a momentum indicator that aggregates multiple rate-of-change calculations, aligns with this bearish narrative. It is bearish on the weekly chart and mildly bearish on the monthly chart, reinforcing the view that momentum is deteriorating across timeframes.

Dow Theory assessments also reflect a mildly bearish stance on both weekly and monthly scales, indicating that the broader market trend for CDSL is under pressure. Meanwhile, On-Balance Volume (OBV) shows no clear trend on either timeframe, suggesting that volume is not confirming price moves, which often precedes a potential trend reversal or continuation of the current bearish phase.

Comparative Performance and Market Context

When compared to the benchmark Sensex, CDSL’s returns present a mixed picture. Over the past week, the stock outperformed the Sensex with a 1.75% gain versus the index’s 0.04%. However, over the one-month period, CDSL declined by 4.46%, underperforming the Sensex’s modest 0.64% fall. Year-to-date, the stock is down 0.64%, slightly better than the Sensex’s 1.67% decline, but the one-year return paints a more concerning picture with CDSL down 10.54% while the Sensex gained 10.22%.

Longer-term returns remain robust, with three-year gains of 167.98% significantly outpacing the Sensex’s 43.59%, and an impressive five-year return of 455.82% compared to the Sensex’s 78.02%. This highlights the stock’s strong historical growth trajectory despite recent technical setbacks.

Mojo Score and Rating Update

MarketsMOJO’s latest assessment downgraded CDSL’s Mojo Grade from Hold to Sell on 12 January 2026, reflecting the deteriorating technical and momentum indicators. The current Mojo Score stands at 42.0, signalling weak overall sentiment. The Market Cap Grade remains low at 3, indicating limited market capitalisation strength relative to peers.

This downgrade aligns with the technical trend shift from mildly bearish to outright bearish, underscoring the need for investors to exercise caution. The combination of bearish MACD, moving averages, and Bollinger Bands suggests that the stock may face further downward pressure in the near term unless there is a significant reversal in momentum.

Sector and Industry Considerations

Operating within the capital markets sector, CDSL’s performance is influenced by broader market dynamics and regulatory developments affecting depository services. While the sector has shown resilience, the technical signals for CDSL indicate that it is currently lagging behind sector peers. Investors should monitor sector trends closely, as any positive catalysts could help reverse the bearish momentum.

Given the stock’s strong long-term returns, the current technical weakness may represent a consolidation phase or a correction within a broader uptrend. However, the absence of confirming volume trends and neutral RSI readings suggest that a cautious approach is warranted until clearer signals emerge.

Investor Takeaways and Outlook

For investors tracking CDSL, the current technical landscape suggests a period of caution. The bearish signals across multiple indicators imply that the stock may face resistance in breaking higher levels in the short to medium term. The 52-week high of ₹1,828.90 remains a distant target, with the stock currently trading closer to its 52-week low of ₹1,047.45, indicating a wide trading range and potential volatility ahead.

Investors should watch for any changes in the MACD and RSI indicators, as a shift towards bullish momentum could signal a recovery. Additionally, confirmation from volume trends and moving averages will be critical to validate any trend reversal. Until then, the downgrade to a Sell rating and the bearish technical trend advise prudence.

Long-term investors may consider the stock’s impressive multi-year returns as a foundation for holding, but short-term traders should be mindful of the prevailing bearish momentum and adjust their strategies accordingly.

Conclusion

Central Depository Services (India) Ltd is currently navigating a challenging technical environment marked by bearish momentum and weak confirming signals. While the stock’s fundamentals and long-term growth remain strong, the recent downgrade in Mojo Grade and the predominance of bearish technical indicators suggest that investors should approach with caution. Monitoring key technical levels and momentum indicators will be essential to gauge the stock’s next directional move within the capital markets sector.

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