JK Paper, Star Paper Mills: Is it the right time to invest in paper stocks?

Major paper stocks have crossed their respective 200-DMA.

Paper stocks such as JK Paper, Star Paper Mills, among others were trading in the red in the morning deals on Thursday. The demand for paper has taken a hit as schools, colleges continue to remain closed due to the Covid-19 pandemic. 

For the quarter ended September 2020, JK Paper reported a nearly 72 per cent decline in its profit at Rs 34.70 crore as against Rs 123.66 crore during the previous quarter ended September 2019. Sales of the company slipped 19.25 per cent year-on-year (YoY) to Rs 638.44 crore during the period. 

Analysts at IDBI Capital, in a result review note issued on November 1, noted that the company’s writing and printing paper (WPP) demand remained subdued in Q2, while packaging board growth returned to pre-Covid level.

That said, is it the right time to invest in paper stocks? Let's take a look at what the charts suggest. 

JK Paper Limited (JKPAPER): The counter has managed to cross 50-weekly moving average (WMA) at Rs 99 along with 200-day moving average (DMA) placed at Rs 96 levels. Both these breakouts suggest further upside in short-term trading towards Rs 115, which is its 200-WMA. The Relative Strength Index (RSI) has managed to cross the significant resistance of 52 value indicating the stock to witness firm upside. Till the stock manages to hold Rs 98 and Rs 95 on the closing basis, the upside bias should prevail. CLICK HERE FOR THE CHART
 
Tamil Nadu Newsprint & Papers Limited (TNPL): The counter is attempting to cross the significant resistance range of Rs 125 to Rs 120 levels. If it manages to cross it defensively, then the further upside may see a rally in the direction of Rs 140 levels. On the downside, till the price is trading above Rs 100 levels, the stock will make attempts to cross the resistance range. The RSI is climbing higher gradually. This indicates that the strength will hold the upside bias. CLICK HERE FOR THE CHART
 
Star Paper Mills Limited (STARPAPER): One can clearly observe the sideways movement in the range of Rs 115 to Rs 80 levels. Only a move beyond this consolidation may suggest a further trend. The Moving Average Convergence Divergence (MACD) is attempting to cross the zero line. If it does, then one can expect a positive breakout as per the weekly chart. CLICK HERE FOR THE CHART
 
West Coast Paper Mills Limited (WSTCSTPAPR): A very short term "Inverse Head and Shoulder" breakout at Rs 177 illustrates a positive rally towards Rs 200 levels. The upside momentum has a support of Rs 165 and till it is defended, the positive bias may see Rs 210 and Rs 217 from a medium-term perspective. The MACD has crossed the zero line successfully indicating a bullish sentiment. CLICK HERE FOR THE CHART
 
Emami Paper Mills Limited (EMAMIPAP): The counter is in the progress of forming a “Golden Cross” formation as per the daily chart. If that happens, the upside may see a surge towards Rs 120 levels. The possibility of the formation may emerge above Rs 97 levels, which is the immediate resistance. At current momentum, the trend is sluggish as RSI is in overbought condition with the stock nearing the resistance areas. CLICK HERE FOR THE CHART
 
Andhra Paper Limited (ANDHRAPAP): The counter has successfully managed to cross 200-DMA placed at Rs 201 levels. The overall breakout is reflecting a rally towards Rs 220 and Rs 232 levels. Till the counter manages to hold Rs 200 levels on the downside, the upside bias may see more addition in volumes. The market participants are positive on the stock as the MACD is gradually rising upward indicating a firm momentum with an upward direction. CLICK HERE FOR THE CHART