The stock has been on a steep slide since mid-July, though a sharp bounce last week sparked hopes of a turnaround.
Deepak Nitrite has been under pressure since mid-July, sliding from above ₹2,000 to a recent low near ₹1,780.
The stock finally saw some relief with a strong bullish candle, but SEBI-registered analyst Deepak Pal cautioned that the broader trend is still weak.
Pal pointed out that the Parabolic SAR, a trend-following indicator, has just flipped below the price, often seen as the first sign of a reversal.
Moving average convergence divergence (MACD) is negative, but the histogram is contracting, so selling may be losing steam. Its relative strength index (RSI) is back to 44 after coming off oversold, indicating some space for short-term recovery.
Fundamentals And Industry Backdrop
Deepak Nitrite is one of the largest chemical manufacturers in India, with operations in basic, speciality and performance chemicals that are used in a range of applications from pharma and agrochemicals to dyes and petrochemicals.
The company has recorded robust top-line growth over the last five years, but as Pal highlighted, margins have been under pressure recently as raw material costs have increased.
However, its debt-light balance sheet, solid cash flows, and leadership in select chemical categories remain clear positives.
Pal also highlighted the company’s broad export presence and ongoing expansion in phenol and acetone plants.
Moves to substitute imports and secure long-term contracts to supply global clients also help. But a few risks remain: chemicals is a cyclical business; crude oil price volatility impacts costs; and any curbs on the use of specific chemicals may dent demand, he added.
On sector-specific concerns, Pal said, global chemical prices are under pressure and that could hurt margins. Crude oil price volatility and ongoing trade tensions also keep some uncertainty around, he said.
The analyst added that government policy support, including production-linked incentives (PLI), though, fuels a robust long-term growth story for Indian chemical companies.
Outlook
According to Pal, the next quarterly earnings will be important to watch for signs of margin recovery, while plant expansions should strengthen revenue visibility. Policy changes in the upcoming budget or incentives under the PLI scheme could also prove to be re-rating triggers.
Pal suggested that short-term traders could wait for a sustained move above ₹1,900 to put on new positions, and long-term investors could use dips to ₹1,750–₹1,800 to gradually add.
He, however, warned that a slowdown in global demand, a spike in crude prices, or new regulatory curbs on certain chemicals could quickly sour the outlook.
What Is The Retail Mood?
On Stocktwits, retail sentiment was ‘bullish’ amid ‘normal’ message volume.
Deepak Nitrite’s stock has declined 27.3% so far in 2025.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<