Hindustan Unilever Ltd Faces Bearish Momentum Amid Technical Downgrade

Technical Momentum Shifts to Bearish

HUL’s technical trend has deteriorated from mildly bearish to outright bearish, reflecting growing downside pressure. The Moving Average Convergence Divergence (MACD) indicator, a key momentum gauge, remains bearish on both weekly and monthly charts, underscoring persistent selling momentum. The daily moving averages also align with this negative outlook, reinforcing the downward trajectory in the near term.

The Relative Strength Index (RSI), however, remains neutral with no clear signal on weekly or monthly timeframes, suggesting the stock is neither oversold nor overbought at present. This lack of RSI confirmation tempers the bearish signals somewhat but does not negate the prevailing negative momentum.

Bollinger Bands on weekly and monthly charts indicate a mildly bearish stance, with price action hugging the lower band, signalling potential volatility and a risk of further downside if support levels fail to hold. The Know Sure Thing (KST) indicator presents a mixed picture: bearish on the weekly scale but mildly bullish monthly, hinting at some underlying strength that could moderate losses over a longer horizon.

Price Action and Moving Averages

On 6 January 2026, HUL’s stock price closed at ₹2,385.95, up from the previous close of ₹2,347.80, with an intraday high of ₹2,394.00 and a low of ₹2,335.20. Despite this short-term uptick, the stock remains well below its 52-week high of ₹2,779.70, indicating a significant gap from peak levels. The 52-week low stands at ₹2,136.00, placing the current price closer to the lower end of its annual range.

Daily moving averages have turned bearish, signalling that recent price gains may be short-lived unless sustained by stronger volume or positive catalysts. The On-Balance Volume (OBV) indicator shows no clear trend on weekly or monthly charts, suggesting volume has not decisively supported the price moves, which is a cautionary sign for momentum traders.

Comparative Returns Highlight Underperformance

When benchmarked against the Sensex, HUL’s returns reveal a mixed performance. Over the past week, the stock outperformed the Sensex with a 4.09% gain versus the index’s 0.88%. Similarly, the one-month return of 2.01% contrasts with the Sensex’s negative 0.32%. Year-to-date, HUL has gained 3.05%, ahead of the Sensex’s 0.26% rise.

However, over longer periods, HUL has lagged significantly. The one-year return is -0.81% compared to the Sensex’s robust 7.85%. Over three and five years, HUL’s returns are -7.57% and -2.61% respectively, while the Sensex surged 41.57% and 76.39% in the same periods. Even on a decade-long horizon, HUL’s 181.43% gain trails the Sensex’s 234.01%, highlighting the stock’s relative underperformance despite its blue-chip status.

Dow Theory and Market Sentiment

According to Dow Theory, HUL’s weekly chart shows a mildly bullish signal, while the monthly chart indicates no clear trend. This divergence suggests that while short-term market sentiment may be cautiously optimistic, the longer-term outlook remains uncertain. The absence of a definitive monthly trend aligns with the mixed signals from other technical indicators.

The overall MarketsMOJO score for HUL stands at 37.0, reflecting a Sell rating with a Market Cap Grade of 1, the lowest tier. This downgrade from a previous Hold rating on 3 December 2025 reflects the deteriorating technical and fundamental outlook. The downgrade is a clear signal for investors to reassess their positions, especially given the stock’s underperformance relative to the broader market and the FMCG sector’s competitive pressures.

Implications for Investors

Investors should approach HUL with caution given the prevailing bearish technical signals. The combination of a bearish MACD, daily moving averages, and Bollinger Bands suggests that the stock could face further downside pressure in the near term. The neutral RSI and mixed KST readings imply that any recovery may be tentative and require confirmation through stronger volume and positive fundamental developments.

Long-term investors should also consider the stock’s relative underperformance against the Sensex over multiple timeframes. While HUL remains a dominant player in the FMCG sector, its growth trajectory appears to be lagging behind broader market gains, which may warrant portfolio diversification or consideration of alternative FMCG stocks with stronger momentum and fundamentals.

Conclusion: Technical Weakness Clouds Outlook

Hindustan Unilever Ltd’s recent technical downgrade to a Sell rating by MarketsMOJO reflects a clear shift in price momentum and market sentiment. The bearish MACD, daily moving averages, and Bollinger Bands, combined with the stock’s underwhelming long-term returns relative to the Sensex, suggest that investors should exercise caution. While short-term price gains have been observed, the lack of strong volume support and mixed indicator signals imply that these may not be sustainable.

For investors focused on the FMCG sector, it is prudent to monitor HUL’s technical developments closely and consider peer comparisons to identify stocks with stronger momentum and growth potential. The current technical landscape indicates that HUL may face headwinds in the near term, making it a less attractive option for momentum-driven portfolios.

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