Dixon Technologies shares slip 9% in two days, give up Rs 17,000 mark; should you 'sell on rise'?

Shares of Dixon Technologies have given up the key Rs 17,000 mark after 19 sessions. The fall in the electronics manufacturing services (EMS) stock comes after 9% correction in two sessions. Analysts attributed the big correction in stock to profitbooking. 

Meanwhile, the stock slipped 4.84% in the current session to Rs 16,660 against the previous close of Rs 17508.75 on BSE. Market cap of the firm declined to Rs 1.01 lakh crore. However, the stock is still up 38.04% from its 52 week low of Rs 12,326.60 reached on April 7 this year. 

Turnover rose to Rs 18.84 crore as 0.11 lakh shares of the firm changed hands on BSE. 

Shares of Dixon Technologies are trading higher than the 100 day, 150 day, 200 day and lower than the 5 day, 10 day, 20 day, 30 day and 50 day moving averages, signalling the trend is moderately bearish for the market leader in its segment. 

The relative strength index (RSI) of Dixon Technologies stands at 46.6, signaling it's trading in the neither in the overbought nor in the oversold territory.

Shitij Gandhi, Sr. Research Analyst (Technicals), SMC Global Securities said, "Dixon Technologies witnessed a sharp breakdown on the daily charts, ending its steady upward trajectory of the past few months. The stock had been moving in a well-defined rising channel; however, the latest session saw a decisive breakdown with a large bearish candle accompanied by strong volumes, indicating heavy selling pressure. On the downside, immediate support lies near the Rs 16,100–Rs 15,800 zone, coinciding with the 100-day and 200-day exponential moving averages. A breach below this zone could extend the decline towards Rs 15,000–Rs 14,800 levels, where the stock had earlier consolidated."

Ameya Ranadive, Chartered Market Technician, CFTe, Sr Technical Analyst, StoxBox said, "Dixon Technologies is currently trading near Rs 16,820 after breaking down from a rising channel around Rs 17,750. The stock has largely moved within a broad range of Rs 12,750– Rs 18,000 over the past year. As long as it sustains below the Rs 17,780 mark, the near-term trend remains bearish with potential downside targets at Rs 15,800, and further at Rs 14,500 if support fails.

Technical indicators confirm the cautious outlook. The Relative Strength Index (RSI) has dropped sharply to around 43, reflecting waning momentum. The Average Directional Index (ADX) near 34 highlights strengthening trend activity, with the negative DI crossing above the positive DI, a bearish signal. The MACD histogram, though still positive, is showing signs of contraction, suggesting momentum could fade further.

Unless Dixon reclaims Rs 17,780 decisively, traders may prefer a sell-on-rise approach, while long-term investors should wait for stability near key support zones before re-entry."

Riyank Arora, Technical Analyst at Mehta Equities said, "Dixon Technologies has seen a sharp 9% correction over the last two sessions, mainly on profit-booking after a strong rally. The long-term structure remains positive, but short-term charts indicate near-term pressure. Key support lies at Rs 16,300; sustaining above this could trigger a rebound toward Rs 17,400– Rs 17,600. However, a close below the Rs 16,300 mark may extend weakness toward Rs 15,800. A stop loss of Rs 16,200 is advised for fresh entries."

Dixon Technologies (India) is the largest home-grown design-focused and solutions company engaged in contract manufacturing products in the consumer durables, lighting and mobile phones markets in India.