Why is Concord Drugs falling/rising?

Recent Price Movement and Market Context

Concord Drugs has experienced a notable correction in the past week, with the stock declining by 8.77%, contrasting sharply with the Sensex’s modest gain of 0.79% over the same period. This underperformance is particularly striking given the stock’s impressive longer-term returns, including a year-to-date gain exceeding 108% and a one-year return of nearly 124%, far outpacing the Sensex’s 10.47% over the same timeframe. Over five years, Concord Drugs has surged by approximately 230%, underscoring its strong growth trajectory relative to the broader market’s 94.23% rise.

Despite these robust fundamentals, the recent price action suggests a phase of profit-taking or short-term caution among investors. The stock’s current price is trading above its 20-day, 50-day, 100-day, and 200-day moving averages, indicating a solid medium- to long-term uptrend. However, it has slipped below the 5-day moving average, signalling some immediate downward momentum.

Intraday Trading Patterns and Investor Behaviour

On 21-Nov, the stock touched an intraday low of ₹77.29, representing a 4.99% decline from its previous close. The weighted average price indicates that a larger volume of shares traded closer to this lower price point, suggesting that sellers dominated the session. This pattern often reflects a lack of strong buying interest at higher levels, which can exacerbate downward price pressure.

Investor participation appears to be waning, as evidenced by a significant drop in delivery volume. On 20 Nov, the delivery volume was recorded at 5,230 shares, marking a steep 57.45% decline compared to the five-day average delivery volume. This reduction in investor commitment may indicate hesitation or uncertainty among shareholders, potentially contributing to the recent price softness.

Liquidity remains adequate, with the stock’s traded value supporting reasonable trade sizes, which means that the price movements are unlikely to be caused by illiquidity but rather genuine shifts in market sentiment.

Balancing Short-Term Volatility with Long-Term Strength

While the recent three-day decline has shaved approximately 9.27% off the stock’s value, it is important to contextualise this within Concord Drugs’ broader performance. The company’s stock has delivered exceptional returns over the past year and beyond, significantly outperforming the benchmark indices. This suggests that the current dip may be a temporary correction rather than a fundamental shift in the company’s prospects.

Investors should note that the stock remains well above key moving averages, which often act as support levels during pullbacks. The short-term weakness, combined with falling investor participation, points to a cautious market environment where traders may be locking in profits after a strong rally.

In summary, Concord Drugs’ share price decline on 21-Nov is primarily driven by short-term profit-taking and reduced investor engagement, despite the company’s solid long-term growth record and relative outperformance against the Sensex. Market participants will be watching closely to see if the stock stabilises near its moving averages or if the recent selling pressure extends further.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →