Maruti Tumbling with the market drop; Buy the dip or reserve the profits?

India’s largest passenger vehicle automaker, Maruti Suzuki (NS:) has also witnessed investors’ portfolios liquidate amid the market slide. While the index has plunged more than 5.7% in the past three sessions alone, a major contributor to the fall has been Maruti Suzuki, which is the most weighted stock in the index with a weighting of 20 .39%.

Maruti’s share price has taken a hit of around 6.5% since Friday’s selling frenzy and continues to fall. The stock had been a major supporter of the broader market rally in the past and on Friday it hit a multi-year high of INR 9,451, which also illustrates simple investor demand, but it looks like she also gives up her strength. The drop since then has disappointed some investors, but some who missed the rally are now preparing to buy the drop.

In FY22, the company recorded an annual revenue growth of 22.81% to INR 90,236.4 crore, which is the first positive revenue growth since FY2019, with the following two years having experienced a steady contraction in income. However, the company staged a successful comeback in FY22 with the highest revenue ever. On the earnings front, a decline was seen mainly due to the rising cost of raw materials. Despite lower profit of INR 3,879.5 crore in FY22 from INR 4,389.1 crore a year ago, the company increased its dividend from INR 45 per share to INR 60 per share.

Image Description: Maruti Suzuki daily chart with rising trendline support

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Turning now to the Maruti stock chart, the stock saw a notable decline as the market chaos continued. Since March 2022, the stock has exhibited a one-way rally and the trend can be depicted via a rising trend line on the daily chart. As long as the stock remains above this trendline, the overall trend should be considered positive. Today the level around 8250 INR is a strong trendline support. However, as the days go by, this support would continue to rise as it is an upward trendline support, not a horizontal support which remains static.

The territory above the trendline is all for the bulls. However, once the stock breaks this rising support forcefully and begins to trade below it, the bulls might have to pull back as the bears would then take charge.