Chalet Hotels Ltd Faces Bearish Momentum Amid Technical Downgrade

Technical Trend Shift and Indicator Overview

Chalet Hotels Ltd’s technical trend has transitioned from mildly bearish to outright bearish, signalling increased downside risk. The Moving Average Convergence Divergence (MACD) indicator, a key momentum oscillator, remains bearish on the weekly chart and mildly bearish on the monthly chart. This suggests that while short-term momentum is clearly negative, longer-term momentum is weakening but not yet decisively bearish.

The Relative Strength Index (RSI), which measures overbought or oversold conditions, currently shows no clear signal on either weekly or monthly timeframes. This neutral RSI reading indicates that the stock is neither oversold nor overbought, leaving room for further directional movement.

Bollinger Bands, which track price volatility and potential reversal points, are mildly bearish on the weekly chart and bearish on the monthly chart. This combination points to increased volatility with a downward bias, reinforcing the negative momentum.

Daily moving averages have turned bearish, confirming that the stock’s short-term price action is under pressure. The Know Sure Thing (KST) indicator, which aggregates multiple rate-of-change measures, is bearish weekly and mildly bearish monthly, further supporting the negative momentum narrative.

Notably, Dow Theory and On-Balance Volume (OBV) indicators show no clear trend on weekly or monthly charts, suggesting that volume and broader market trend confirmations are currently lacking. This absence of volume confirmation may imply that the bearish momentum is primarily driven by price action rather than strong selling pressure.

Price Action and Volatility Analysis

On 16 Feb 2026, Chalet Hotels Ltd closed at ₹853.65, down 2.81% from the previous close of ₹878.30. The stock traded within a range of ₹851.60 to ₹871.15 during the day, indicating moderate intraday volatility. The current price remains significantly below its 52-week high of ₹1,080.00 but comfortably above the 52-week low of ₹643.65, reflecting a wide trading band over the past year.

This price action, combined with the bearish technical indicators, suggests that the stock is under pressure but has not yet approached oversold extremes. Investors should be cautious as the downward momentum may persist unless there is a meaningful reversal in technical signals.

Relative Performance Versus Sensex

Despite the recent technical deterioration, Chalet Hotels Ltd has delivered strong long-term returns relative to the broader market. Over the past year, the stock has gained 24.62%, significantly outperforming the Sensex’s 8.52% return. Over three and five years, the outperformance is even more pronounced, with Chalet Hotels Ltd returning 132.6% and 389.62% respectively, compared to the Sensex’s 36.73% and 60.30%.

However, in the short term, the stock’s returns have been mixed. Over the past month, Chalet Hotels Ltd declined 2.36%, slightly worse than the Sensex’s 1.20% fall. Year-to-date, the stock is down 1.92%, though it still outperforms the Sensex’s 3.04% decline. The one-week period shows a modest 0.45% gain for Chalet Hotels Ltd, contrasting with the Sensex’s 1.14% loss, indicating some resilience despite the bearish technical signals.

Mojo Score and Grade Downgrade

MarketsMOJO’s proprietary scoring system assigns Chalet Hotels Ltd a Mojo Score of 37.0, categorising it as a Sell. This represents a downgrade from the previous Hold rating, effective from 29 Dec 2025. The downgrade reflects the deteriorating technical parameters and the increased risk profile of the stock.

The company’s Market Cap Grade is 3, indicating a small-cap status within the Hotels & Resorts sector. This classification often entails higher volatility and sensitivity to market sentiment, which is consistent with the recent technical weakness observed.

Implications for Investors

The shift to a bearish technical trend and the downgrade to a Sell rating suggest that investors should exercise caution with Chalet Hotels Ltd in the near term. The absence of strong volume confirmation and neutral RSI readings imply that the stock could continue to experience choppy price action without a clear directional trend.

Investors with a longer-term horizon may find value in the company’s strong historical returns and sector positioning, but should be mindful of the current technical headwinds. Monitoring key support levels near ₹850 and the behaviour of moving averages will be critical to assess any potential reversal or further decline.

Conclusion: Technical Weakness Amid Mixed Fundamentals

Chalet Hotels Ltd’s recent technical downgrade and bearish momentum indicators highlight a challenging near-term outlook. While the stock has demonstrated impressive long-term returns and sector resilience, the current technical signals caution investors about potential further downside or consolidation.

Given the mixed signals from volume and trend confirmation tools, investors should closely monitor technical developments and broader market conditions before increasing exposure. The downgrade to a Sell rating by MarketsMOJO underscores the need for prudence and suggests that alternative investment opportunities may offer better risk-adjusted returns at this juncture.

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