Why is Deep Polymers falling/rising?

Persistent Underperformance Against Benchmarks

Deep Polymers has been on a downward trajectory for an extended period. Over the past week, the stock fell by 8.23%, contrasting sharply with the Sensex’s modest gain of 0.87%. The one-month performance further emphasises this trend, with the stock declining 12.01% while the Sensex rose 2.03%. Year-to-date figures reveal a stark divergence: Deep Polymers has lost 41.11% of its value, whereas the Sensex has gained 9.60%. Over the last year, the stock’s decline deepened to 42.96%, compared to the Sensex’s 7.32% rise. Even over a three-year horizon, Deep Polymers has plummeted 72.80%, while the benchmark index appreciated by 35.33%. Although the five-year return shows a modest 10.69% gain for the stock, it pales in comparison to the Sensex’s robust 91.78% growth.

Sharp Intraday Decline and Volatility on 01-Dec

On 01-Dec, Deep Polymers opened with a substantial gap down of 16.66%, signalling immediate bearish sentiment among investors. The stock’s intraday low touched ₹35.87, marking a significant 16.66% drop from the previous close. The trading range for the day was wide, spanning ₹7.5, indicative of heightened volatility. This was further confirmed by an intraday volatility measure of 9.46%, calculated from the weighted average price. Notably, the weighted average price showed that a greater volume of shares traded closer to the day’s low, suggesting selling pressure dominated throughout the session.

Technical Indicators and Investor Participation

Technically, Deep Polymers is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This alignment of moving averages below the current price is a classic indicator of a sustained downtrend. Additionally, investor participation appears to be waning. Delivery volume on 28 Nov was recorded at 1.35 thousand shares, representing an 81.4% decline compared to the five-day average delivery volume. This sharp fall in delivery volume suggests reduced conviction among buyers, further exacerbating the stock’s downward momentum.

Liquidity and Trading Dynamics

Despite the sharp price movements and volatility, Deep Polymers remains sufficiently liquid for trading, with the stock’s liquidity based on 2% of the five-day average traded value allowing for sizeable trade sizes. However, the liquidity has not translated into positive price action, as the stock continues to face selling pressure. The combination of high volatility, wide intraday price swings, and declining investor participation paints a challenging picture for the stock in the near term.

Sector and Market Context

Deep Polymers’ underperformance is also evident when compared to its sector peers. On 01-Dec, the stock underperformed its sector by 5.73%, indicating that the weakness is not solely market-driven but also company-specific or related to sectoral headwinds. The broader market, as represented by the Sensex, has maintained positive momentum, further highlighting the stock’s relative weakness.

Conclusion: Why Deep Polymers Is Falling

The decline in Deep Polymers’ share price on 01-Dec is a continuation of a prolonged downtrend marked by significant underperformance relative to the Sensex and its sector. The sharp gap down opening, intraday volatility, and trading volume concentrated near the lows reflect strong selling pressure. Technical indicators confirm the bearish trend, with the stock trading below all major moving averages. Furthermore, the marked reduction in delivery volumes signals weakening investor interest and confidence. While liquidity remains adequate, it has not been sufficient to arrest the decline. In summary, Deep Polymers is falling due to sustained negative momentum, poor relative performance, and diminished investor participation amid a volatile trading environment.

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