Fertilizers & Chemicals Travancore Ltd Faces Bearish Momentum Amid Technical Downgrade

Technical Trend Shift and Market Performance

FACT’s technical trend has transitioned from mildly bearish to outright bearish, underscoring a weakening price momentum. The stock closed at ₹780.00, down from the previous close of ₹801.65, marking a 2.7% decline on 20 Feb 2026. Intraday, the price fluctuated between ₹780.00 and ₹806.45, failing to sustain any upward momentum. This underperformance is more pronounced when compared to the broader market, with the Sensex declining by only 1.41% over the past week, while FACT’s weekly return stands at -2.59%.

Over longer periods, the stock’s returns have been mixed. Year-to-date, FACT has fallen 14.53%, significantly underperforming the Sensex’s 3.19% decline. However, over a 10-year horizon, the stock has delivered an extraordinary 3,742.36% return, vastly outpacing the Sensex’s 247.96%. This long-term outperformance highlights the company’s historical growth but contrasts sharply with recent technical weakness.

MACD and Momentum Indicators Signal Bearishness

The Moving Average Convergence Divergence (MACD) indicator, a key momentum oscillator, presents a bearish outlook on both weekly and monthly charts. The weekly MACD is firmly bearish, indicating that the short-term momentum is weakening relative to the longer-term trend. The monthly MACD remains mildly bearish, suggesting that while the longer-term downtrend is not severe, it is still unfavourable.

Complementing the MACD, the Know Sure Thing (KST) indicator also reflects bearish momentum on the weekly timeframe, with a mildly bearish stance on the monthly chart. These signals collectively point to a sustained weakening in price momentum, which could pressure the stock further in the near term.

RSI and Moving Averages Confirm Downtrend

The Relative Strength Index (RSI) currently shows no clear signal on either weekly or monthly charts, hovering in a neutral zone. This suggests that the stock is neither oversold nor overbought, leaving room for further downside if selling pressure intensifies.

More decisively, the daily moving averages are bearish, with the stock trading below its key short-term and medium-term averages. This alignment of moving averages confirms the prevailing downtrend and indicates that any rallies may face resistance near these levels.

Bollinger Bands and On-Balance Volume (OBV) Divergence

Bollinger Bands on both weekly and monthly charts are bearish, reflecting increased volatility and downward price pressure. The stock price is currently near the lower band, which often signals oversold conditions but can also indicate strong bearish momentum if the price continues to hug the band.

Interestingly, the On-Balance Volume (OBV) indicator shows bullish signals on both weekly and monthly timeframes. This divergence between price momentum and volume suggests that while selling pressure has dominated price action, accumulation by some investors may be occurring. Such a scenario can sometimes precede a reversal, but confirmation through price action is necessary.

Dow Theory and Sector Context

According to Dow Theory, the weekly trend for FACT is mildly bullish, but the monthly trend remains mildly bearish. This mixed signal indicates short-term attempts at recovery amid a longer-term downtrend. The fertilisers sector itself has faced headwinds due to fluctuating input costs and regulatory pressures, which have weighed on investor sentiment.

FACT’s market capitalisation grade stands at a low 2, reflecting its mid-cap status and limited liquidity compared to larger peers. The company’s Mojo Score has deteriorated to 21.0, prompting an upgrade in the rating severity from Sell to Strong Sell as of 22 Dec 2025. This downgrade reflects the accumulation of negative technical signals and weak price momentum.

Valuation and Price Range Analysis

The stock’s 52-week high of ₹1,111.00 contrasts sharply with its current price of ₹780.00, representing a 29.8% decline from the peak. The 52-week low stands at ₹565.20, indicating that the stock still has some downside risk if bearish momentum persists. The recent price action near the lower end of this range suggests caution for investors considering entry at current levels.

Long-Term Performance Versus Sensex

Despite recent weakness, FACT’s long-term returns remain impressive. Over five years, the stock has surged 903.86%, vastly outperforming the Sensex’s 62.11% gain. Over three years, the stock’s return of 214.71% also dwarfs the Sensex’s 35.24%. This historical outperformance highlights the company’s growth potential, though recent technical deterioration signals the need for prudence.

Investor Takeaway and Outlook

Investors should approach Fertilizers & Chemicals Travancore Ltd with caution given the current technical landscape. The convergence of bearish MACD, moving averages, and Bollinger Bands suggests that downward price pressure may continue in the short to medium term. The absence of clear RSI signals and the bullish OBV divergence offer a glimmer of hope for a potential base formation, but confirmation is required before considering a reversal.

Given the Strong Sell rating and the deteriorated Mojo Grade, investors may prefer to monitor the stock closely or explore alternative opportunities within the fertilisers sector or broader market. The stock’s historical outperformance is encouraging, but recent technical signals highlight the importance of timing and risk management.

In summary, while FACT remains a fundamentally significant player in the fertilisers industry, its current technical parameters caution against aggressive buying. A wait-and-watch approach, combined with a focus on superior alternatives, may better serve investors seeking exposure to this sector.

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