Zen Technologies shares in correction mode, time to buy, sell or hold?

Shares of Zen Technologies Ltd tumbled 14% in morning session on Tuesday even as the aerospace and defence major said CRISIL Ratings has upgraded/reaffirmed the credit ratings on bank facilities of the company. With today's crash, the stock has taken its six day correction to 32.20%. The stock closed at Rs 2,205.35 on January 20 and  has been falling since then. 

In the current session, Zen Technologies shares fell 14.23% to Rs 1495.10 on BSE. Total 1.49 lakh shares of the firm changed hands amounting to a turnover of Rs 23.48 crore. Market cap of the firm slipped to Rs 13,990 crore on BSE. 

Kushal Gandhi, Technical Analyst, StoxBox said, "The share price of Zen Technologies continues to face profit booking pressure, indicating a potential for ongoing corrective trends after a remarkable rise of over 1700% from the lows in May 2022. Recently, the price action confirmed the distribution of holdings among investors following a breakdown from an inverted cup and handle pattern on January 22. Since then, the stock has remained under consistent selling pressure, resulting in a decline below the key moving average of 200 DMA, now trading around the 1613 level with relatively high trading volumes. This situation has led the stock to breach its shorter-term weekly moving averages for the first time since January 2023, and it currently sits precariously at the support level of 50 WMA." 

"The subsequent sell-off has weakened buyer demand and EPS strength. Additionally, the RSI on daily and higher timeframes is showing a negative slope, suggesting a loss of price momentum. Given these factors, we anticipate continued selling pressure and therefore recommend selling the stock at its current market price," added Gandhi

AR Ramachandran, SEBI registered Independent analyst says, "Zen Technologies stock price is bearish but also oversold on the Daily charts with next support at Rs 1341. Investors should buy only if daily close is above resistance of Rs 1760 for a target of Rs 2282 in the near term."

Hardik Matalia, Derivative Analyst at Choice Broking said,  "Zen Technologies stock is currently trading near key support zones; however, its position below all major moving averages, including short-term (20-day), medium-term (50-day), and long-term (200-day) EMAs, suggests a continuation of the downtrend. The Relative Strength Index (RSI) is trending downward at 20.75, indicating that the stock is in oversold territory. While this suggests the possibility of a technical bounce from current levels, traders should exercise caution. Any bounce at this stage should not be interpreted as a reversal but rather as an opportunity to exit existing holdings. For confirmation of a sustainable recovery, the stock must exhibit a strong and convincing move above Rs 1,800, along with potential signs of reversal in momentum and volume patterns."

"On the downside, if the stock breaches the Rs 1,450 support level, it could face extended selling pressure, potentially dragging the stock further down to the Rs 1,300–Rs 1,200 range. Until the stock confirms a reversal and shows signs of stability, fresh long positions should be avoided. Instead, traders and investors should wait for a sustainable breakout above resistance levels or clear signs of a trend reversal to consider re-entering," added Matalia. 

The stock hit a 52 week low of Rs 762.65 on January 29, 2024 and touched a 52 week high of Rs 2627.95 on December 24, 2024. With today's correction, the stock has fallen 41.13% from its 52 week high. In terms of technicals, the relative strength index (RSI) of Zen Technologies stands at 25.8, signaling it's trading in the oversold zone. Zen Technologies stock has a one-year beta of 1, indicating average volatility during the period. Zen Technologies shares are trading lower than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.     

Zen Technologies Limited designs, develops, and manufactures defence training systems, based on sensors and simulators technology. The company’s category of products includes land-based military training simulators, driving simulators, live range equipment and anti-drone systems. The company also has a training platform in Hyderabad, with an integration of its complete product range. Its Anti-Drone System (ZADS) system works on drone detection, classification and tracking on passive surveillance, camera sensors and neutralization of threat by jamming drone communication.