Centrum Capital Ltd Faces Bearish Momentum Amid Technical Downgrade

Technical Momentum Shifts to Bearish Territory

Recent technical analysis reveals that Centrum Capital’s price momentum has shifted decisively from mildly bearish to outright bearish. The daily moving averages have turned negative, with the stock currently trading at ₹26.77, down 2.97% from the previous close of ₹27.59. This decline places the stock closer to its 52-week low of ₹22.41, far below its 52-week high of ₹41.90, underscoring the downward pressure on prices.

The Moving Average Convergence Divergence (MACD) indicator, a widely followed momentum oscillator, confirms this bearish trend. Both weekly and monthly MACD readings remain firmly in bearish territory, signalling sustained selling pressure. The weekly MACD histogram continues to show negative divergence, suggesting that downward momentum is likely to persist in the near term.

Meanwhile, the Relative Strength Index (RSI) on both weekly and monthly timeframes remains neutral, offering no immediate oversold or overbought signals. This lack of RSI extremes indicates that while the stock is under pressure, it has not yet reached a technical bottom, leaving room for further downside.

Bollinger Bands and KST Confirm Weakness

Bollinger Bands, which measure volatility and potential price reversals, are mildly bearish on both weekly and monthly charts. The stock price is hovering near the lower band, suggesting increased volatility and a potential continuation of the downtrend rather than a reversal. The Know Sure Thing (KST) indicator, another momentum oscillator, aligns with this view, showing bearish signals on the weekly chart and mildly bearish readings monthly.

These technical signals collectively point to a weakening trend, with the stock struggling to find support amid broader sector challenges and market headwinds.

Mixed Signals from Volume and Dow Theory

On balance, volume-based indicators provide a nuanced picture. The On-Balance Volume (OBV) indicator is mildly bullish on the weekly timeframe, suggesting some accumulation by investors despite the price decline. However, the monthly OBV shows no clear trend, indicating a lack of sustained buying interest over longer periods.

Dow Theory analysis offers a slight divergence from the bearish consensus. The weekly Dow Theory signal is mildly bullish, hinting at some underlying strength or potential for short-term rallies. Yet, the monthly Dow Theory shows no definitive trend, reinforcing the overall uncertainty and lack of conviction among market participants.

Comparative Performance and Market Context

Centrum Capital’s recent returns have lagged behind the broader market benchmark, the Sensex, across multiple time horizons. Over the past week, the stock posted a strong 6.74% gain, outperforming the Sensex’s modest 0.43% rise. However, this short-term strength masks longer-term underperformance. Over one month, Centrum declined 3.08% compared to a 0.24% drop in the Sensex. Year-to-date, the stock has fallen 7.98%, significantly underperforming the Sensex’s 1.81% decline.

Over the one-year period, Centrum’s return was negative 6.07%, while the Sensex gained 9.85%. Even over three and five years, Centrum’s cumulative returns of 20.59% and 7.08% respectively pale in comparison to the Sensex’s 37.89% and 62.34%. The 10-year return gap is even more pronounced, with Centrum delivering 112.46% against the Sensex’s 264.02%.

This relative underperformance highlights the challenges Centrum faces in regaining investor confidence and market share within the NBFC sector, which itself has been under pressure due to tightening credit conditions and regulatory scrutiny.

Market Capitalisation and Quality Grades

Centrum Capital’s market capitalisation grade stands at 4, indicating a mid-tier valuation relative to its peers. The downgrade in the Mojo Grade from Sell to Strong Sell, with a current score of 16.0, reflects a deteriorating outlook based on a comprehensive assessment of price momentum, volume trends, and fundamental factors.

Investors should note that the downgrade was effected on 24 Nov 2025, signalling that the technical deterioration has been building for several months. The current day’s price action, with a decline of nearly 3%, reinforces the bearish sentiment prevailing in the market.

Outlook and Investor Considerations

Given the confluence of bearish technical indicators and relative underperformance, Centrum Capital appears vulnerable to further downside in the near term. The absence of strong RSI signals suggests that the stock has not yet reached oversold conditions, implying that the current downtrend could extend.

However, the mildly bullish volume signals and weekly Dow Theory hints at potential short-term relief rallies, which may offer tactical trading opportunities for nimble investors. Long-term investors should remain cautious and monitor key support levels near ₹22.41, the 52-week low, for signs of stabilisation.

Sectoral headwinds in the NBFC space, including rising interest rates and credit risk concerns, are likely to weigh on Centrum’s performance until clearer signs of earnings recovery and asset quality improvement emerge.

Summary

Centrum Capital Ltd’s technical profile has worsened significantly, with multiple indicators confirming a bearish momentum shift. The downgrade to a Strong Sell Mojo Grade and the stock’s underperformance relative to the Sensex underscore the challenges ahead. While short-term volume signals and Dow Theory provide some hope for intermittent rallies, the overall trend remains negative.

Investors should exercise caution and consider alternative NBFC stocks with stronger technical and fundamental profiles. Monitoring key support levels and broader sector developments will be critical in assessing any potential turnaround.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →