Why is Suncity Synth. falling/rising?

Recent Price Movement and Short-Term Performance

On 08 December, Suncity Synthetics closed at ₹14.36, down marginally by ₹0.02 or 0.14%. This small dip follows a three-day consecutive decline during which the stock lost approximately 9.57% in value. Despite this short-term weakness, the stock has marginally outperformed its sector today by 1.69%, indicating some relative resilience within its industry group.

However, the stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning suggests a bearish momentum in the near term, as the price remains under pressure and has yet to recover above these important technical levels.

Investor participation appears to be waning, with delivery volume on 05 December recorded at 62, representing a sharp decline of 59.69% compared to the five-day average delivery volume. This drop in investor engagement could be contributing to the recent price softness, as lower volumes often signal reduced buying interest and can exacerbate price declines.

Comparative Performance Against Benchmarks

Looking beyond the immediate price action, Suncity Synthetics has delivered mixed returns relative to the broader market benchmark, the Sensex. Over the past week, the stock declined by 0.35%, a smaller drop than the Sensex’s 0.63% fall, indicating a slightly better short-term relative performance. Over the last month, the stock gained 3.61%, outpacing the Sensex’s 2.27% rise, which suggests some recent positive momentum.

However, the year-to-date and one-year figures reveal a more challenging environment for the stock. Suncity Synthetics has declined by 28.91% year-to-date and 29.61% over the past year, while the Sensex has risen by 8.91% and 4.15% respectively during these periods. This stark contrast highlights the stock’s underperformance in the medium term, which may be weighing on investor sentiment.

On a more encouraging note, the stock has significantly outperformed the Sensex over longer horizons. Over three years, it has appreciated by 77.28%, more than double the Sensex’s 36.01% gain. Over five years, the stock’s return of 259.90% far exceeds the benchmark’s 86.59%, reflecting strong long-term growth and value creation for patient investors.

Liquidity and Trading Considerations

Liquidity remains adequate for trading, with the stock’s average traded value supporting a trade size of approximately ₹0 crore based on 2% of the five-day average traded value. This suggests that while the stock is not among the most actively traded, it maintains sufficient liquidity for investors to enter or exit positions without significant market impact.

Despite this, the recent decline in delivery volumes and the stock’s position below all major moving averages indicate caution among investors. The combination of technical weakness and reduced participation may be contributing to the ongoing price softness.

In summary, Suncity Synthetics is experiencing a short-term correction amid subdued investor interest and technical headwinds. While the stock has outperformed its sector today and shown resilience relative to the Sensex in the past month, its year-to-date and one-year underperformance highlight challenges that investors should carefully consider. The longer-term track record remains impressive, but near-term price action suggests a cautious approach is warranted.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →