Technical Trend Overview and Momentum Analysis
The technical trend for Dhanlaxmi Bank has shifted from mildly bearish to outright bearish, reflecting increased selling pressure and weakening momentum. The Moving Average Convergence Divergence (MACD) indicator remains bearish on both weekly and monthly timeframes, signalling that the stock’s short-term momentum is lagging behind its longer-term trend. This persistent bearish MACD suggests that downward momentum is entrenched, with no immediate signs of reversal.
The Relative Strength Index (RSI), however, remains neutral with no clear signal on weekly or monthly charts. This indicates that while the stock is not currently oversold or overbought, it lacks the momentum to trigger a bullish reversal. The absence of a strong RSI signal adds to the cautious outlook, as the stock is not showing signs of a recovery rally.
Bollinger Bands on both weekly and monthly charts are mildly bearish, with the price hovering near the lower band. This positioning often indicates increased volatility and potential for further downside, especially if the stock fails to rebound towards the middle band. Daily moving averages reinforce the bearish stance, with the stock price trading below key averages, confirming short-term weakness.
Mixed Signals from Other Technical Indicators
While the overall technical picture is bearish, some indicators provide a nuanced view. The Know Sure Thing (KST) oscillator is mildly bullish on the weekly timeframe but bearish on the monthly, suggesting short-term attempts at recovery may be overshadowed by longer-term weakness. Similarly, the On-Balance Volume (OBV) indicator shows mild bullishness weekly, implying some accumulation by investors, but lacks a monthly trend, indicating uncertainty in sustained buying interest.
Dow Theory analysis aligns with the broader bearish sentiment, showing a mildly bearish trend weekly and no clear trend monthly. This mixed technical landscape suggests that while short-term price action may see intermittent gains, the dominant momentum remains negative.
Price Action and Volatility
Dhanlaxmi Bank’s current price stands at ₹25.14, up slightly from the previous close of ₹24.96. The stock traded within a range of ₹24.10 to ₹25.77 today, reflecting moderate intraday volatility. Despite this, the price remains well below its 52-week high of ₹33.38 and only marginally above the 52-week low of ₹22.01, underscoring the stock’s struggle to regain upward momentum over the past year.
The day’s modest gain of 0.72% contrasts with the broader technical deterioration, highlighting a disconnect between short-term price movements and underlying momentum indicators. Investors should be cautious, as such small gains may represent technical rebounds rather than sustained trend changes.
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Comparative Returns and Market Context
When analysing Dhanlaxmi Bank’s returns relative to the Sensex, the stock has underperformed significantly over longer time horizons. Over the past year, the stock has declined by 21.19%, while the Sensex gained 7.28%. This stark contrast highlights the challenges faced by the bank amid a generally bullish market environment.
Shorter-term returns show a mixed picture: a 1-week gain of 0.84% closely tracks the Sensex’s 0.85% rise, but over one month, the stock fell 5.10% against a 0.73% Sensex gain. Year-to-date, Dhanlaxmi Bank has outperformed slightly with a 1.41% return versus the Sensex’s 0.64%, though this is insufficient to offset the longer-term underperformance.
Over three and five years, the bank’s returns of 24.76% and 72.78% lag behind the Sensex’s 40.21% and 79.16%, respectively. The 10-year return of 14.01% pales in comparison to the Sensex’s 227.83%, underscoring the stock’s persistent underperformance in a broader market context.
Mojo Score and Grade Downgrade
Dhanlaxmi Bank’s current Mojo Score stands at 43.0, reflecting weak technical and fundamental parameters. The Mojo Grade was downgraded from Hold to Sell on 20 Oct 2025, signalling a deteriorating outlook. The Market Cap Grade is 4, indicating a relatively small market capitalisation compared to larger peers, which may contribute to higher volatility and risk.
The downgrade reflects the cumulative impact of bearish technical indicators, underwhelming price momentum, and disappointing relative returns. Investors should weigh these factors carefully when considering exposure to this micro-cap private sector bank.
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Investor Implications and Outlook
Given the prevailing bearish technical signals and the stock’s underperformance relative to the broader market, investors should exercise caution. The persistent bearish MACD and moving averages suggest that downward momentum may continue in the near term. The lack of strong RSI signals and mixed readings from KST and OBV indicators imply that any short-term rallies may be limited and potentially short-lived.
For long-term investors, the stock’s historical underperformance compared to the Sensex and its modest market capitalisation grade indicate elevated risk. The downgrade to a Sell grade by MarketsMOJO further emphasises the need for prudence.
Investors seeking exposure to the private sector banking space may consider evaluating alternative stocks with stronger technical momentum and more favourable fundamental profiles. Monitoring key technical indicators such as MACD crossovers, RSI thresholds, and moving average trends will be crucial to identifying potential entry points or exit signals.
Conclusion
Dhanlaxmi Bank Ltd’s technical momentum has shifted decisively towards bearish territory, with multiple indicators confirming weakening price action and subdued investor sentiment. Despite a slight uptick in price today, the broader technical and fundamental context suggests caution. The downgrade in Mojo Grade to Sell reflects these concerns, underscoring the need for investors to reassess their positions in this micro-cap private sector bank amid challenging market conditions.
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