Key Events This Week
Dec 29: Stock opens at Rs.33.70, down 4.99%
Dec 30: Downgrade to Strong Sell announced
Jan 1: Continued price decline to Rs.30.05
Jan 2: Death Cross formation signals bearish trend
December 29: Sharp Opening Decline Amid Market Weakness
SEL Manufacturing began the week on a weak note, closing at Rs.33.70, down 4.99% from the previous close of Rs.35.47. This decline was sharper than the Sensex’s 0.41% drop to 37,140.23, signalling early selling pressure on the stock. The volume was relatively low at 370 shares, reflecting cautious investor sentiment as the company’s fundamentals remained under scrutiny.
December 30: Downgrade to Strong Sell Highlights Fundamental Weakness
On 30 December, SEL Manufacturing was downgraded by MarketsMOJO from a Sell to a Strong Sell rating, citing deteriorating financial health and technical shifts. The downgrade was driven by alarming fundamentals including a negative book value, a high debt-to-equity ratio of 3.05 times, and a persistent contraction in net sales at an annualised rate of -38.08% over five years.
The company reported negative EBITDA and losses for six consecutive quarters, with net sales of ₹13.90 crores and a net loss of ₹130.49 crores in the latest nine-month period, both down approximately 74.03% year-on-year. These figures underscore the severe operational challenges faced by SEL Manufacturing in the garments and apparels sector.
Following the downgrade, the stock price fell further to Rs.32.02, another 4.99% decline, while the Sensex remained almost flat, down 0.01%. The downgrade also highlighted valuation concerns, with the stock trading well below its 52-week high of Rs.48.81 and promoter share pledging at 36%, increasing the risk of forced selling.
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December 31 to January 1: Continued Price Decline Despite Sensex Recovery
The downward trend persisted as SEL Manufacturing’s stock price dropped to Rs.30.72 on 31 December, a 4.06% decline, even as the Sensex rebounded by 0.83% to 37,443.41. The volume surged to 2,614 shares, indicating increased trading activity amid the price fall.
On 1 January, the stock further declined by 2.18% to Rs.30.05, while the Sensex inched up 0.14% to 37,497.10. This divergence between the stock’s performance and the broader market highlights the company-specific challenges weighing on SEL Manufacturing, including its weak financial metrics and investor concerns over its future prospects.
January 2: Death Cross Formation Signals Bearish Trend Ahead
On the final trading day of the week, SEL Manufacturing’s stock price rebounded modestly by 3.16% to close at Rs.31.00, outperforming the Sensex’s 0.81% gain. However, this short-term uptick was overshadowed by a significant technical development: the formation of a Death Cross, where the 50-day moving average crossed below the 200-day moving average.
This technical indicator is widely regarded as a bearish signal, suggesting a potential sustained downtrend and weakening price momentum. The Death Cross, combined with the company’s negative price-to-earnings ratio of -0.50 and ongoing losses, reinforces the cautious outlook for SEL Manufacturing.
Other technical indicators present a mixed picture, with mildly bullish momentum signals such as the MACD and Know Sure Thing (KST) on weekly charts, but bearish daily moving averages and Bollinger Bands indicating downward pressure. The Relative Strength Index (RSI) remains neutral, reflecting no clear oversold or overbought conditions.
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Daily Price Comparison: SEL Manufacturing vs Sensex
| Date | Stock Price | Day Change | Sensex | Day Change |
|---|---|---|---|---|
| 2025-12-29 | Rs.33.70 | -4.99% | 37,140.23 | -0.41% |
| 2025-12-30 | Rs.32.02 | -4.99% | 37,135.83 | -0.01% |
| 2025-12-31 | Rs.30.72 | -4.06% | 37,443.41 | +0.83% |
| 2026-01-01 | Rs.30.05 | -2.18% | 37,497.10 | +0.14% |
| 2026-01-02 | Rs.31.00 | +3.16% | 37,799.57 | +0.81% |
Key Takeaways
Fundamental Weakness: SEL Manufacturing’s downgrade to Strong Sell reflects severe deterioration in financial health, including negative book value, high debt levels, and sustained losses. The company’s net sales have contracted sharply, and losses have persisted for six consecutive quarters, signalling deep operational challenges.
Valuation and Risk: The stock trades well below its 52-week high and faces elevated risk due to 36% promoter share pledging, increasing the likelihood of forced selling. The negative P/E ratio and poor sales trends further undermine valuation appeal.
Technical Signals: The formation of a Death Cross is a significant bearish indicator, suggesting potential for continued downward momentum. While some momentum indicators show mild bullishness, the overall technical outlook remains cautious with bearish daily moving averages and Bollinger Bands.
Market Underperformance: The stock’s 12.60% weekly decline starkly contrasts with the Sensex’s 1.35% gain, highlighting company-specific issues amid a generally positive market environment.
Conclusion
SEL Manufacturing Company Ltd’s week was dominated by negative developments both fundamentally and technically. The downgrade to Strong Sell and the Death Cross formation underscore heightened risks and a bearish outlook. Despite a modest rebound on the final day, the stock’s persistent underperformance relative to the Sensex and deteriorating financial metrics suggest continued caution is warranted. Investors should carefully consider these factors in the context of their portfolios and risk tolerance.
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