5 technical reasons to sell Marico, Dabur and buy Hindustan Unilever

Shares of Hindustan Unilever are exhibiting a major breakout, whereas Dabur India and Marico are not exhibiting much of a promise on the charts.

The recent pullback in the stock markets seems to be gathering remarkable momentum. Select stocks such as TVS Motor Company, Mahindra & Mahindra, AIA Engineering, Chalet Hotels and Coromandel International have registered new historic peaks, while ITC is showing a fresh breakouts at its 52-week high.

The key benchmark indices, the BSE Sensex and the NSE Nifty 50 had hit new 52-week lows at 50,921 and 15,183, respectively, in June, 2022, tumbling 18 per cent from their respective historic peaks. 

Despite the broader market weakenss, select sectorial indices - Nifty Auto and Nifty FMCG were holding well above the respective 200-day moving average (DMAs), which experts read as significant indication for bullishness. So far this month, the Nifty FMCG index has gained over 6 per and the Nifty Auto has advanced 2 per cent. 

The technical indications on the Nifty FMCG index is indicating towards a promising rally ahead and selective stocks could see a turnaround. Beside, ITC which has been drawing major attention, shares of Hindustan Unilever too are exhibiting a major breakout. However, Dabur India and Marico are yet to witness any notable recovery, thus the chart set-up does not seem promising for these two stocks. 

Here are FIVE major reasons as to why Hindustan Unilever should be the preferred pick over Dabur and Marico:-.  

200-DMA breakout

Shares of Hindustan Unilever are trading well above the 200-DMA placed at Rs 2,288, with volumes showing signs of incremental interest. On the flip side, Dabur India and Marico trade under the critical average. In addition, these two stocks are struggling to conquer their major hurdles.

Inverse Head and Shoulder Breakout

Hindustan Unilever shares have broken out on the Inverse Head and Shoulder pattern, shows the weekly chart. The said pattern demonstrates medium-term bullish outlook with stock building strength to claim a new historic peak. Dabur India has falling channel pattern and Marico continues to trade in sideways consolidation, the trend needs to be closely monitored. 

Monthly trend

In the past three months, Hindustan Unilever has been making a “Higher High, Higher Low” formation and continues to rally with a strong bias, up over 20 per cent since March 2022. Dabur India recorded a new 52-week low in June 2020, while Marico lingers around lower range of the pullback.

MACD over the Zero line

The weekly chart of Hindustan Unilever shows that the Moving Average Convergence Divergence (MACD) is rising over the zero line, a technical indicator that determines the momentum and a direction of the trend. Whereas, Dabur India and Marico have not only failed to cross the zero line, they are yet to show a positive convergence with firm trend. 

Golden Cross on lower moving averages

Hindustan Unilever has formed a “Golden Cross”, a convergence of 50-DMA and 100-DMA symbolising a bullish upside ahead. While 200-DMA remains the crucial average, a positive convergence of 50-DMA and 100-DMA remains an optimistic signal.  Meanwhile, Dabur India and Marico are far from showing any such signal. CLICK HERE FOR THE CHART