Shriram Asset Management Co Ltd Faces Intensified Bearish Momentum Amid Technical Downgrade

Technical Momentum Shifts to Bearish

The stock, currently trading at ₹376.30, has seen a sharp decline from its previous close of ₹406.00, marking a day change of -7.32%. This drop is significant against the backdrop of its 52-week high of ₹690.00 and a low of ₹331.80, indicating a substantial retracement from its peak levels. The technical trend has shifted from mildly bearish to outright bearish, signalling increased selling pressure.

On the daily chart, moving averages have turned bearish, with the stock price trading below key averages, suggesting downward momentum. The weekly and monthly charts reinforce this view, with the Moving Average Convergence Divergence (MACD) indicator showing bearish signals on the weekly scale and mildly bearish on the monthly scale. This divergence indicates that while short-term momentum is weakening, longer-term trends are also under pressure but less decisively so.

RSI and Bollinger Bands Confirm Weakness

The Relative Strength Index (RSI) on both weekly and monthly timeframes currently shows no clear signal, hovering in neutral zones. This lack of momentum suggests the stock is neither oversold nor overbought, but the absence of bullish RSI readings fails to provide any immediate relief to the bears.

Bollinger Bands, however, present a more concerning picture. Both weekly and monthly Bollinger Bands are bearish, indicating that the stock price is trending towards the lower band, a sign of increased volatility and downward pressure. This technical setup often precedes further declines or consolidation at lower levels.

Mixed Signals from KST and Dow Theory

The Know Sure Thing (KST) indicator offers a nuanced view. On the weekly timeframe, it is mildly bullish, suggesting some short-term positive momentum or potential for a bounce. However, the monthly KST remains mildly bearish, aligning with the broader negative trend. Similarly, Dow Theory assessments show a mildly bullish stance on the weekly chart but no definitive trend on the monthly scale, reflecting uncertainty among longer-term investors.

Volume and On-Balance Volume (OBV) Insights

Volume data and On-Balance Volume (OBV) readings are inconclusive, with no clear signals on weekly or monthly charts. This lack of volume confirmation weakens the case for a sustained rally and supports the prevailing bearish technical narrative.

Comparative Performance Against Sensex

When analysing returns relative to the benchmark Sensex, Shriram Asset Management Co Ltd has underperformed significantly in the short and medium term. Over the past week, the stock has declined by 10.78%, compared to a marginal 0.30% drop in the Sensex. The one-month return also shows a 5.08% loss against the Sensex’s 0.88% decline. Year-to-date, the stock mirrors the weekly loss of 10.78%, while the Sensex remains relatively stable.

Over a longer horizon, the stock’s performance is more impressive, with a 33.16% decline over one year contrasting with an 8.65% gain in the Sensex. However, the three, five, and ten-year returns remain robust at 272.94%, 610.00%, and 1075.94% respectively, far outpacing the Sensex’s 41.84%, 76.66%, and 241.87% gains. This disparity highlights the stock’s strong historical growth but recent volatility and technical deterioration.

Mojo Score and Grade Reflect Growing Bearish Sentiment

Shriram Asset Management’s Mojo Score currently stands at 12.0, with a Mojo Grade of Strong Sell, upgraded from a previous Sell rating on 18 Aug 2025. This downgrade reflects the deteriorating technical and fundamental outlook, signalling that the stock is expected to underperform in the near term. The Market Capitalisation Grade is 4, indicating a mid-sized market cap but not enough to offset the negative momentum.

The downgrade is consistent with the technical indicators, which collectively suggest that investors should exercise caution. The bearish moving averages, combined with negative MACD and Bollinger Band signals, outweigh the mildly bullish KST and Dow Theory weekly signals, reinforcing the overall negative bias.

Price Volatility and Intraday Range

On 8 Jan 2026, the stock exhibited significant intraday volatility, with a high of ₹410.00 and a low of ₹363.05. This wide range underscores the uncertainty and selling pressure in the market. The closing price near the lower end of this range further confirms the bearish sentiment prevailing among traders and investors.

Strategic Implications for Investors

Given the current technical landscape, investors should be wary of initiating new long positions in Shriram Asset Management Co Ltd. The strong sell rating and negative momentum indicators suggest that the stock may continue to face downward pressure in the short to medium term. However, long-term investors may consider the stock’s impressive multi-year returns as a factor for potential accumulation during significant corrections, provided the broader market conditions improve.

Conclusion: Technicals Signal Caution Amid Volatility

Shriram Asset Management Co Ltd’s recent technical parameter changes highlight a clear shift towards bearish momentum. The combination of declining price action, bearish moving averages, negative MACD and Bollinger Band signals, and a downgrade to Strong Sell on the Mojo Grade scale all point to a challenging near-term outlook. While some weekly indicators offer mild bullish hints, these are insufficient to counterbalance the broader negative trend.

Investors should closely monitor the stock’s price action and technical indicators for any signs of reversal or consolidation. Until then, a cautious stance is advisable, with consideration given to alternative investment opportunities within the capital markets sector that may offer more favourable risk-reward profiles.

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