Under bear attack, top Nifty gainer of 2024 is down 28% this year; buy, sell or hold?

Shares of Trent Ltd-the top gainer on Nifty in 2024- are down 28% this year. The Tata Group stock zoomed 133% on the 50-stock index last year. However, the retail stock of the conglomerate is trading near the oversold zone  in the current session. Its RSI stands at 31.9. A RSI below 30 indicates the stock has more sellers than buyers. 

The stock is in the bearish zone. Trent stock is trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages. 

Stuck in the bear grip, Trent shares have fallen  39.04% from their record high of Rs 8,345.85 reached on October 14, 2024. 

Of late, the stock has seen a more scathing attack by bears with a crash of 17% in a month. Investor sentiment was hit in early July after the management flagged growth concerns in the near term. As per management, Q1FY26 growth is seen around 20% in core fashion business, lower than the 5 year CAGR of 35%. 

The management reaffirmed its aspiration of 25% plus growth for the coming few years, but the current run rate falls short of it.

Noting the development, brokerage Nuvama cut FY26E/27E revenue by -5%/-6% and EBITDA by -9%/-12%. 

On Thursday, shares of Trent received a downgrade call from global brokerage Goldman Sachs, which also gave a ‘neutral’ rating against a ‘buy’ call earlier. 

The brokerage firm also trimmed the price target by 21%, setting it at Rs 5,500 per share, down from Rs 6,970. The downgrade is primarily attributed to higher-than-expected cannibalisation impacts, affecting the company’s financial year 2026 sales and earnings per share estimates, which have been cut by 5% to 9% and 8% to 13%, respectively.

Hardik Matalia, Derivative Analyst, Choice Broking said, “Trent has been in a sustained bearish trend over the past few months, forming a consistent pattern of lower highs and lower lows on the daily chart. Although the stock recently attempted a bounce from lower levels, it failed to hold and faced fresh rejection, indicating that selling pressure remains intact.
For Trent to signal a meaningful trend reversal, it must deliver a sustained move above the Rs 6,300 mark. Until then, any short-term rallies are likely to be viewed as selling opportunities. The stock is trading below all its key moving averages, further confirming the prevailing weakness in the trend.

Short-term traders can consider shorting on any rise as long as the price stays below Rs 6,300. On the downside, if the stock breaches the crucial Rs 4,500 support zone, it could witness increased selling pressure and further downside.”

Shitij Gandhi, Sr. Research Analyst (Technicals), SMC Global Securities said,”
From a technical perspective, the stock has breached its long-term moving averages and has also broken below the rising trendline of an ascending channel on the daily charts. The downward momentum has been accompanied by elevated trading volumes, indicating sustained long unwinding.

Given the current technical setup, the stock is expected to remain under pressure in the near term, with the next key support zone seen around Rs 5,100. On the upside, the Rs 5,600-5,700 range is likely to act as a significant resistance level.”

AR Ramachandran, SEBI registered Independent analyst says, “Trent stock price is slightly bearish on the Daily charts with strong resistance at Rs 5,505. A Daily close below support of Rs 5,305 could  lead to a target of 5078 in the near term.”