Swaraj Engines Ltd Sees Shift to Bearish Momentum Amid Mixed Technical Signals

Technical Trend Overview

The latest technical assessment reveals that Swaraj Engines’ overall trend has deteriorated from mildly bearish to bearish. The Moving Average Convergence Divergence (MACD) indicator, a critical momentum gauge, remains bearish on the weekly chart and mildly bearish on the monthly chart, indicating persistent downward pressure over the medium term. Meanwhile, the Relative Strength Index (RSI) shows no clear signal on either weekly or monthly charts, suggesting a lack of strong momentum in either direction at present.

Bollinger Bands present a mixed picture: bearish on the weekly timeframe but bullish on the monthly, implying short-term volatility with potential longer-term support. Daily moving averages have turned bearish, reinforcing the near-term negative momentum. The Know Sure Thing (KST) indicator aligns with this view, bearish weekly and mildly bearish monthly, further confirming the weakening price momentum.

Price Action and Volatility

On 6 January 2026, Swaraj Engines closed at ₹3,692.00, slightly up from the previous close of ₹3,685.40, with intraday highs and lows of ₹3,713.10 and ₹3,654.00 respectively. The stock remains well below its 52-week high of ₹4,725.95 but comfortably above the 52-week low of ₹2,530.00, reflecting a wide trading range over the past year. This range highlights the stock’s volatility and the challenges in sustaining upward momentum amid sectoral and market pressures.

Comparative Returns Against Sensex

When benchmarked against the Sensex, Swaraj Engines has outperformed significantly over longer horizons. The stock delivered a 17.7% return over the past year compared to Sensex’s 7.9%, and an impressive 133.0% return over three years versus the Sensex’s 41.6%. Over five and ten years, the stock’s cumulative returns of 156.3% and 282.0% respectively have also outpaced the broader market, which returned 76.4% and 234.0% in the same periods. However, recent shorter-term returns show some weakness, with a 0.96% decline over the past month compared to a 0.32% drop in the Sensex, signalling emerging headwinds.

Moving Averages and Momentum Indicators

The daily moving averages have turned bearish, signalling that the stock’s short-term trend is weakening. This is a critical development as moving averages often act as dynamic support and resistance levels. The bearish crossover suggests that sellers are gaining control, potentially leading to further downside if the stock fails to reclaim these averages.

The weekly MACD’s bearish stance, combined with the mildly bearish monthly MACD, indicates that momentum is slowing across multiple timeframes. The absence of a clear RSI signal on both weekly and monthly charts suggests that the stock is neither oversold nor overbought, leaving room for further downside or sideways consolidation.

Bollinger Bands’ weekly bearish signal points to increased volatility and potential downward price pressure in the near term, while the monthly bullish signal hints at possible longer-term support zones. The KST indicator’s bearish weekly and mildly bearish monthly readings reinforce the overall negative momentum, suggesting that the stock may continue to face selling pressure in the coming weeks.

Volume and Trend Confirmation

On-Balance Volume (OBV) and Dow Theory indicators currently show no definitive trend on either weekly or monthly charts. This lack of volume confirmation means that while price momentum is bearish, it is not yet strongly supported by trading volume, which could limit the extent of any decline or signal a potential reversal if volume picks up.

Market Capitalisation and Mojo Ratings

Swaraj Engines holds a Market Cap Grade of 3, reflecting a mid-tier market capitalisation within its sector. The company’s Mojo Score has declined to 41.0, resulting in a downgrade from a Hold to a Sell rating as of 5 December 2025. This downgrade reflects the deteriorating technical outlook and the increasing risks perceived by analysts. The Sell grade suggests that investors should exercise caution and consider risk management strategies in their portfolios.

Sector and Industry Context

Operating within the Compressors, Pumps & Diesel Engines sector, Swaraj Engines faces sector-specific challenges including fluctuating raw material costs, regulatory pressures, and demand variability linked to industrial cycles. The technical deterioration may partly reflect these broader sectoral headwinds, which have weighed on investor sentiment and price momentum.

Investor Takeaway and Outlook

While Swaraj Engines Ltd has demonstrated strong long-term returns relative to the Sensex, recent technical signals caution investors about near-term risks. The shift to a bearish technical trend, confirmed by multiple momentum indicators and moving averages, suggests that the stock may face downward pressure or consolidation in the coming weeks. The lack of volume confirmation and mixed signals from Bollinger Bands and RSI imply that the stock could experience volatility without a clear directional bias.

Investors should closely monitor key support levels near the current price and watch for any changes in volume or momentum indicators that could signal a reversal or further decline. Given the downgrade to a Sell rating and the deteriorating technical landscape, a cautious approach is advisable, particularly for those with shorter investment horizons.

Long-term investors may find value in the stock’s historical outperformance but should remain vigilant to sectoral developments and broader market conditions that could impact the company’s fundamentals and price trajectory.

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