Why is HP Adhesives falling/rising?

Extended Downtrend and Market Underperformance

HP Adhesives has been experiencing a persistent decline over multiple time frames. Over the past week, the stock has fallen by 5.13%, contrasting sharply with the Sensex’s modest gain of 0.65% during the same period. The one-month performance is even more striking, with the stock shedding 14.78% while the Sensex advanced by 1.43%. Year-to-date, HP Adhesives has plunged 46.23%, a stark contrast to the Sensex’s 8.96% rise. Over the last year, the stock’s decline of 47.22% stands in sharp opposition to the Sensex’s 6.09% gain. Even over a three-year horizon, HP Adhesives has lost 44.72%, while the benchmark index has surged 35.42%. This persistent underperformance highlights significant challenges facing the company or its sector relative to the broader market.

Intraday Weakness and Technical Indicators

On 02-Dec, HP Adhesives hit a new 52-week and all-time low of ₹42.20, marking a significant technical milestone that often signals investor pessimism. The stock’s intraday low represented a 6.39% drop from previous levels, underscoring the intensity of selling pressure. The weighted average price for the day indicates that a greater volume of shares traded closer to this low price, suggesting that sellers dominated the session. Furthermore, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning typically reflects a bearish sentiment among traders and investors, reinforcing the downward momentum.

Investor Participation and Liquidity

Interestingly, despite the falling price, investor participation has increased. Delivery volume on 01 Dec rose to 59,350 shares, a 68.48% increase compared to the five-day average delivery volume. This heightened activity could indicate that some investors are either exiting positions amid the decline or opportunistically accumulating at lower levels. The stock’s liquidity remains adequate, with the traded value supporting transactions of approximately ₹0.01 crore based on 2% of the five-day average traded value, ensuring that investors can execute trades without significant market impact.

Contextualising the Decline

The stark contrast between HP Adhesives’ performance and the broader market indices suggests company-specific or sectoral challenges rather than general market weakness. While the Sensex and other benchmarks have shown resilience and growth, HP Adhesives continues to struggle, reflected in its sustained price erosion and technical weakness. The absence of positive dashboard data or news further implies that no recent favourable developments have supported the stock price. Investors should note the prolonged nature of the decline and the technical signals before considering any position in the stock.

Conclusion

HP Adhesives Ltd’s share price decline on 02-Dec is part of a broader, persistent downtrend characterised by underperformance relative to the Sensex and sector peers. The stock’s breach of a new 52-week low, trading below all major moving averages, and increased investor participation amid falling prices all point to a bearish market sentiment. While liquidity remains sufficient for trading, the stock’s technical and fundamental challenges suggest caution for investors. Monitoring future developments and comparing alternatives within the specialty chemicals sector may provide better investment opportunities.

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 →