HFCL Ltd Faces Bearish Momentum Amid Technical Downgrade and Weak Returns

Technical Momentum Shifts to Bearish

HFCL’s technical trend has deteriorated from mildly bearish to outright bearish, signalling increased selling pressure. The Moving Average Convergence Divergence (MACD) indicator remains bearish on both weekly and monthly charts, underscoring sustained downward momentum. The daily moving averages also confirm this negative bias, with the stock trading below key averages, indicating a lack of short-term buying interest.

The Relative Strength Index (RSI) presents a nuanced picture. While the weekly RSI offers no clear signal, the monthly RSI has turned bullish, suggesting some underlying strength over a longer horizon. However, this monthly bullishness is contradicted by other indicators such as Bollinger Bands and the Know Sure Thing (KST) oscillator, both of which remain bearish on weekly and monthly timeframes.

On volume-based metrics, the On-Balance Volume (OBV) indicator shows no trend on the weekly scale but a bullish trend monthly, hinting at accumulation over a longer period despite short-term selling. Dow Theory analysis, however, fails to identify any definitive trend on either weekly or monthly charts, reflecting market indecision.

Price Action and Volatility

HFCL’s current price stands at ₹67.15, down from the previous close of ₹67.77, marking a day change of -0.91%. The stock’s intraday range has fluctuated between ₹66.60 and ₹70.14, reflecting moderate volatility. The 52-week high of ₹114.35 and low of ₹60.73 highlight a wide trading band, with the current price closer to the lower end, indicating significant depreciation over the past year.

Such price action aligns with the bearish technical signals and suggests that investors remain cautious amid sectoral headwinds and broader market uncertainties. The telecom equipment industry has faced challenges from supply chain disruptions and competitive pressures, which may be weighing on HFCL’s outlook.

Relative Performance Versus Sensex

Examining HFCL’s returns relative to the Sensex reveals a mixed performance. Over the past week, HFCL outperformed the Sensex with a 3.24% gain compared to the benchmark’s 0.88%. However, this short-term strength is overshadowed by longer-term underperformance. The stock declined 2.54% over the past month versus a 0.32% drop in the Sensex, and year-to-date returns show a slight loss of 0.89% against a 0.26% gain in the benchmark.

More concerning is the one-year return, where HFCL plummeted 41.28%, starkly contrasting with the Sensex’s 7.85% gain. Even over three years, HFCL’s cumulative loss of 9.81% contrasts with the Sensex’s robust 41.57% appreciation. Despite this, the stock has delivered strong long-term gains over five and ten years, with returns of 147.79% and 183.33% respectively, though these lag the Sensex’s 76.39% and 234.01% over the same periods.

MarketsMOJO Ratings and Outlook

MarketsMOJO has recently downgraded HFCL Ltd’s Mojo Grade from Sell to Strong Sell as of 17 Nov 2025, reflecting a more cautious stance on the stock’s prospects. The Mojo Score currently stands at 23.0, signalling weak fundamentals and technicals. The Market Cap Grade is rated 3, indicating a mid-tier market capitalisation relative to peers.

This downgrade is consistent with the bearish technical indicators and the stock’s underwhelming price performance over the past year. Investors should note that the telecom equipment sector remains competitive and capital intensive, which may continue to pressure margins and earnings growth.

Technical Indicators in Detail

The MACD’s bearish stance on weekly and monthly charts suggests that downward momentum is entrenched, with the MACD line below the signal line and both below zero. This typically signals that sellers dominate and that any rallies may be short-lived.

The RSI’s monthly bullish signal, with values likely above 50 but below overbought levels, indicates some underlying buying interest or consolidation. However, the absence of a weekly RSI signal tempers optimism, implying that short-term momentum remains weak.

Bollinger Bands on both weekly and monthly charts are bearish, with the price likely hugging or below the lower band, signalling increased volatility and potential continuation of the downtrend. The KST oscillator’s bearish readings reinforce this view, suggesting momentum is negative across multiple timeframes.

Daily moving averages confirm the bearish trend, with the stock price trading below the 50-day and 200-day averages, a classic technical warning sign. The lack of a clear Dow Theory trend further highlights market indecision, though the prevailing bias is negative.

Investor Implications and Strategy

Given the prevailing bearish technical signals and the recent downgrade to Strong Sell, investors should exercise caution with HFCL Ltd. The stock’s proximity to its 52-week low and weak relative performance over the past year suggest limited near-term upside. While the monthly RSI and OBV hint at some longer-term accumulation, these signals are insufficient to offset the dominant negative momentum.

Long-term investors may consider monitoring for a confirmed technical reversal, such as a MACD crossover or sustained price movement above key moving averages, before increasing exposure. Short-term traders might look to capitalise on volatility but should be wary of the prevailing downtrend and use tight risk management.

Sectoral headwinds and competitive pressures in the telecom equipment space remain key risks. Investors should also compare HFCL with other industry players that may offer stronger fundamentals or more favourable technical setups.

Conclusion

HFCL Ltd’s technical landscape has shifted decisively towards bearishness, with multiple indicators confirming downward momentum. Despite some bullish monthly signals, the overall picture remains negative, reflected in the recent Strong Sell rating by MarketsMOJO. The stock’s underperformance relative to the Sensex over the past year and three years further underscores the challenges it faces.

Investors should approach HFCL with caution, closely monitoring technical developments and sector dynamics before committing capital. Alternative opportunities within the telecom equipment sector may offer better risk-reward profiles at present.

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