Supreme Industries Ltd’s Mixed Week: +0.11% Price, -3.31% Sensex Tell the Story

Jan 19: Week Begins with Mild Decline Amid Market Weakness

Supreme Industries Ltd opened the week at Rs.3,468.60, down 0.50% from the previous close, reflecting cautious investor sentiment. The broader market was similarly weak, with the Sensex falling 0.49% to 36,650.97. Trading volume was moderate at 3,235 shares, indicating a lack of strong conviction among participants. The stock’s performance mirrored sectoral pressures in the Plastic Products - Industrial segment, which faced headwinds from fluctuating raw material costs.

Jan 20: Sharp Price Drop Amid Broader Market Sell-Off

The stock declined sharply by 2.79% to Rs.3,371.75 on 20 January, underperforming the Sensex which fell 1.82%. Volume surged to 9,876 shares, signalling increased selling pressure. This drop coincided with a broader market sell-off driven by macroeconomic concerns. Delivery volumes fell by 28.88% compared to the five-day average, suggesting reduced long-term investor participation. The stock’s technical indicators began to show signs of weakness, foreshadowing further downside risk.

Jan 21: Open Interest Surges 15.1% Amid Bearish Price Action and Technical Downgrade

On 21 January, Supreme Industries Ltd recorded a significant 15.11% increase in open interest in its derivatives segment, rising to 24,522 contracts from 21,304 the previous day. This surge occurred despite the stock’s price falling 0.68% to close at Rs.3,348.80, marking the third consecutive day of decline. The elevated open interest and volume of 31,915 shares indicated fresh short positions or put buying, reflecting bearish market sentiment.

Technical indicators confirmed this negative momentum. The stock traded below all key moving averages, including 5-day, 20-day, and 50-day averages, signalling a sustained downtrend. The Moving Average Convergence Divergence (MACD) was firmly bearish on weekly and monthly charts, while the Know Sure Thing (KST) and Dow Theory assessments also pointed to weakness. The Relative Strength Index (RSI) remained neutral, indicating no oversold conditions yet.

This day also saw a technical downgrade from Hold to Sell by MarketsMOJO, reflecting deteriorating price action and momentum. The stock’s weighted average traded price skewed towards the day’s low of Rs.3,268, underscoring selling pressure. The sector declined 2.25%, with Supreme Industries marginally outperforming by 1.11%, but the overall trend was negative.

Jan 22: Strong Rebound with 4.14% Gain Outpacing Market

Following the bearish pressure, the stock rebounded sharply on 22 January, gaining 4.14% to close at Rs.3,487.45. This rally outpaced the Sensex’s 0.76% gain, signalling a short-term recovery attempt. Volume moderated to 10,397 shares, reflecting renewed buying interest. The stock traded within a range of Rs.3,350 to Rs.3,500, remaining below its 52-week high of Rs.4,740 but comfortably above the 52-week low of Rs.3,020.

This price action suggested a potential pause in the downtrend, supported by a mild improvement in weekly MACD and On-Balance Volume (OBV) indicators. However, monthly technical signals remained bearish, indicating that the longer-term trend had yet to reverse decisively. The stock’s Mojo Score remained at 34.0 with a Sell grade, reflecting cautious analyst sentiment despite the bounce.

Jan 23: Mixed Technical Signals Amid Price Momentum Shift

The week closed on 23 January with the stock nearly flat, gaining a marginal 0.07% to Rs.3,489.80 on volume of 5,140 shares. Technical indicators presented a mixed picture: weekly MACD showed mild bullishness, while monthly MACD and KST remained bearish. Bollinger Bands suggested downward pressure on the weekly chart but a mild easing on the monthly timeframe.

The Relative Strength Index (RSI) hovered in neutral territory, indicating no clear overbought or oversold conditions. Dow Theory assessments classified the trend as mildly bearish, while OBV showed a mildly bullish weekly signal but bearish monthly trend. This divergence underscored the cautious outlook among market participants.

The stock outperformed the Sensex year-to-date and over the past month, delivering returns of 3.86% and 4.22% respectively, compared to Sensex declines of 3.42% and 3.81%. However, over the one-year horizon, Supreme Industries underperformed with a loss of 10.33% versus the Sensex’s 7.73% gain. Longer-term returns remained robust, with a five-year gain of 102.48% and a ten-year gain of 421.46%, highlighting the company’s strong historical performance despite recent volatility.

Key Takeaways

Positive Signals: Despite early-week weakness, Supreme Industries demonstrated resilience with a strong rebound on 22 January, outpacing the Sensex. The mild bullish weekly MACD and OBV signals suggest some short-term buying interest. The stock’s year-to-date and monthly outperformance relative to the benchmark indicates selective strength amid broader market weakness.

Cautionary Signals: The sharp open interest surge amid falling prices on 21 January points to increased bearish positioning, likely from fresh short selling or put buying. The stock remains below all key moving averages, with monthly technical indicators still bearish. The downgrade to a Sell mojo grade and declining delivery volumes highlight reduced long-term investor conviction. The one-year underperformance versus the Sensex underscores ongoing challenges.

Conclusion

Supreme Industries Ltd’s week was characterised by mixed momentum and technical complexity. While the stock managed a slight weekly gain of 0.11%, it faced significant selling pressure midweek, reflected in a 15.1% rise in derivatives open interest amid bearish price action. Technical indicators remain cautious, with a Sell mojo grade and bearish monthly signals tempering optimism. The late-week recovery and mild bullish weekly indicators offer some hope for short-term stability, but investors should remain vigilant given the prevailing sectoral headwinds and technical uncertainties. The stock’s strong long-term track record contrasts with recent volatility, suggesting that any sustained recovery will require confirmation through improved volume and momentum trends.

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