Indigo Paints IPO opens: Trading strategies for other paint stocks

The recent reversal in paint stocks may see aggravated buying momentum after conquering significant resistances

Shares of paint companies traded firm at the bourses on Wednesday as the three-day initial public offering (IPO) of Indigo Paints opened for public subscription. Among individual stocks, Shalimar Paints rose as high as 3.5 per cent on the BSE while Berger Paints and Kansai Nerolac Paints also gained 2 per cent each. Asian Paints also climbed as high as 1.7 per cent in intra-day deals. In comparison, the S&P BSE Sensex was up 0.46 per cent, at 11:47 AM.

The price band of Indigo Paints IPO has been fixed at Rs 1,488-1,490 per share for the initial share sale. Angel Broking has recommended 'subscribe' to the issue owing to the company's track record of consistent growth, differentiated products, and leveraged brand equity and distribution network. READ MORE

Meanwhile, analysts say that while higher oil prices would have an impact on operating profits of paint companies, they are now better-placed to handle it, largely due to significant pricing power. Moreover, there are other levers that could help mitigate cost pressures, a key one being the rebounding housing demand and a strong rural economy. READ MORE

Here's a look at some paint stocks from a technical viewpoint

ASIAN PAINTS LTD (ASIANPAINT): With the recent correction nearing the 50-day moving average (DMA) placed at Rs 2478 levels; the stock attempts to show a reversal.  At current momentum, the stock needs to decisively conquer Rs 2,700 mark, which is its immediate resistance. The Relative Strength Index (RSI) has formed a negative crossover, suggesting a weakness on the upside. CLICK HERE FOR THE CHART
 
SHALIMAR PAINTS LTD (SHALPAINTS): The "Higher High, Higher Low" formation indicates a positive upside for coming sessions, as per the daily chart. Going forward, if the scrip manages to sustain above Rs 110, the upside sentiment may lead the stock price in the direction of Rs 140 levels. The closing basis support comes at Rs 102 for an immediate trend. Although, the RSI is trading in the overbought condition, the stock price is not witnessing any major weakness. CLICK HERE FOR THE CHART 
 
BERGER PAINTS INDIA (BERGEPAINT): This stock has a strong support of Rs 750 levels. Till this support is defended, the upside reversal may see a rise towards the earlier high of Rs 819 levels. The immediate support comes at Rs 790 levels. The trend indicates a weakness on RSI and Moving Average Convergence Divergence (MACD), which have formed a negative crossover. However, the stock price is not showing any adjacent weakness. CLICK HERE FOR THE CHART