Muthoot Finance Ltd Sees Mixed Technical Signals Amid Price Momentum Shift

Recent Price Movement and Market Context

The stock closed at ₹3,499.00 on 2 Feb 2026, down from the previous close of ₹3,827.85, marking a significant intraday drop. The day’s trading range was between ₹3,476.60 and ₹3,749.00, with the 52-week high at ₹4,149.00 and a low of ₹1,964.35. This volatility comes amid broader market weakness, with the Sensex declining by 1.00% over the past week, while Muthoot Finance’s stock fell by 7.97% in the same period.

Over longer horizons, Muthoot Finance has outperformed the benchmark substantially. The stock’s one-year return stands at an impressive 58.68%, compared to the Sensex’s 5.16%. Over three and five years, the stock has delivered returns of 241.93% and 216.25% respectively, dwarfing the Sensex’s 35.67% and 74.40%. The decade-long return is particularly striking at 1,730.02%, reflecting the company’s strong growth trajectory within the Non Banking Financial Company (NBFC) sector.

Technical Trend Analysis: From Bullish to Mildly Bullish

Technical assessments reveal a nuanced picture. The overall trend has shifted from bullish to mildly bullish, signalling a cautious optimism among traders and investors. The daily moving averages indicate a mildly bullish stance, suggesting that short-term momentum remains positive despite recent price weakness.

The Moving Average Convergence Divergence (MACD) indicator presents a mixed scenario. On a weekly basis, MACD is mildly bearish, indicating some downward pressure in the near term. However, the monthly MACD remains bullish, supporting the view that the longer-term trend is intact and positive. This divergence between weekly and monthly MACD readings highlights the importance of timeframe in technical analysis for this stock.

The Relative Strength Index (RSI) does not currently provide a clear signal on either the weekly or monthly charts, hovering in a neutral zone. This suggests that the stock is neither overbought nor oversold, leaving room for potential directional moves based on upcoming market developments.

Bollinger Bands add further complexity. Weekly readings are bearish, reflecting increased volatility and a potential for downward price pressure in the short term. Conversely, the monthly Bollinger Bands are mildly bullish, indicating that the stock’s price remains within a constructive range over the longer term.

Momentum and Volume Indicators

The Know Sure Thing (KST) indicator aligns with the MACD’s mixed signals, showing a mildly bearish trend on the weekly chart but bullish momentum monthly. This suggests that while short-term momentum may be weakening, the underlying strength over several months remains positive.

Dow Theory analysis echoes this pattern, with weekly signals mildly bearish but monthly trends bullish. This duality underscores the importance of monitoring multiple timeframes to gauge the stock’s true momentum.

On-Balance Volume (OBV) does not currently indicate a clear trend on either weekly or monthly charts, implying that volume flows have not decisively confirmed price movements. This lack of volume confirmation may contribute to the recent price volatility and technical uncertainty.

Mojo Score Upgrade and Market Capitalisation Insights

Muthoot Finance’s Mojo Score has been upgraded from 70 (Buy) to 84 (Strong Buy) as of 11 Aug 2025, reflecting improved technical and fundamental metrics. This upgrade signals increased confidence from MarketsMOJO’s analytical framework, which integrates price momentum, volume, and quality grades.

Despite the strong Mojo Grade, the company’s Market Cap Grade remains at 2, indicating a mid-cap status within the NBFC sector. This positioning suggests that while the company is well-established, it still offers growth potential relative to larger peers.

Comparative Sector Performance and Valuation Context

Within the NBFC sector, Muthoot Finance’s technical indicators and returns outpace many competitors, particularly over multi-year horizons. The stock’s resilience amid recent market corrections highlights its defensive qualities and investor appeal.

Valuation metrics, while not detailed here, are likely to be influenced by the recent price correction. Investors should consider the interplay between technical momentum and fundamental valuations when assessing entry points.

Investor Takeaways and Outlook

Investors should note that the recent technical shift to mildly bullish from a previously stronger bullish stance suggests a period of consolidation or cautious trading ahead. The divergence between weekly and monthly indicators implies that short-term volatility may persist, but the longer-term uptrend remains intact.

Given the neutral RSI and lack of volume confirmation via OBV, traders may want to await clearer signals before committing to significant positions. However, the strong Mojo Score and historical outperformance relative to the Sensex provide a compelling case for long-term investors to maintain exposure.

Monitoring key support levels near the recent lows and resistance around the 52-week high of ₹4,149 will be critical in the coming weeks. A sustained break above or below these levels could redefine the technical outlook.

Conclusion

Muthoot Finance Ltd’s technical landscape is currently characterised by a cautious but positive momentum shift. While short-term indicators show mild bearishness or neutrality, the monthly charts and fundamental upgrades support a constructive medium to long-term view. Investors should balance these technical signals with broader market conditions and sector dynamics when making decisions.

Overall, the stock remains a strong candidate within the NBFC space, backed by a robust Mojo Grade upgrade and impressive multi-year returns, despite recent price corrections.

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