Indian Stocks Trading at RSI Below 30: How to Spot Undervalued Opportunities

Estimated reading time: 8 minutes

Key Takeaways

• Indian stocks trading at RSI below 30 can indicate oversold conditions and potential buying opportunities.
• The Relative Strength Index (RSI) is a momentum oscillator used in technical analysis.
• An RSI below 30 suggests a stock has been heavily sold recently and may be undervalued.
• Combine RSI signals with other technical and fundamental analysis for confirmation.
• Tools like stock screeners can help you build your own RSI below 30 stock list India.

Discovering Potential Bargains in the Market

Introduction – Unlocking Potential with Indian Stocks Trading at RSI Below 30

Every investor dreams of finding hidden gems in the stock market—companies whose shares are selling for less than they are truly worth. This dream often involves spotting Indian stocks trading at RSI below 30. This specific technical signal can help point to potential buying chances.

The Relative Strength Index (RSI) is a very useful tool in technical analysis of Indian stocks, helping traders and investors understand how fast and how much a stock’s price is changing. When the RSI dips below 30, it tells us that a stock has been heavily sold recently, leading to “oversold” conditions. Many market watchers see this as a sign that the stock might be undervalued and could be ready for a price bounce back.

This article will show you how to use RSI to find these potentially undervalued Indian stocks. We will explain what RSI is, why a reading below 30 can be important, and how to combine it with other checks to make smart decisions. We’ll also look at examples like Dixon Technologies and SKF India, which have shown low RSI readings, to help you understand how to spot Indian shares with low RSI.

Decoding the Relative Strength Index (RSI) Indicator for Indian Stocks

The Relative Strength Index (RSI) is like a speedometer for stock prices. It’s a special chart line that helps us see if a stock’s price is changing very quickly up or down. RSI is a momentum oscillator that measures the speed and change of price movements on a scale of 0 to 100. This scale helps us know if a stock’s price movement is strong or weak, and if it might be changing direction soon.

How RSI is Calculated (Simply Put)

You don’t need to do complex math, but it’s good to know the basic idea. The RSI looks at the average size of price increases and compares them to the average size of price decreases over a certain time. Most often, this period is 14 days. If a stock has had many big price increases compared to its price decreases, its RSI will be high. If it’s had many big price decreases, its RSI will be low.

The RSI Scale: What the Numbers Mean

The RSI scale gives us quick clues about a stock’s recent price action:

• RSI above 70: This usually means the stock has been bought very heavily and quickly. It’s considered “overbought.” This might suggest its price has risen too fast and could soon go down a bit.
• RSI between 30 and 70: This is the normal or “neutral” zone. It means the stock’s price movements are balanced.
• RSI below 30: This is called “oversold.” It suggests the stock has been sold very heavily and its price might have dropped too much, too quickly. This can be a signal that its price might start to rise again.

Using RSI in Technical Analysis for Indian Equities

RSI is a very popular tool in technical analysis of Indian stocks RSI. Investors and traders use it to gauge market sentiment and identify potential turning points. It helps them see if buying or selling pressure is getting very strong. When looking at Indian companies’ RSI indicators, it’s important to remember that RSI doesn’t work alone. It’s one piece of a bigger puzzle.

It’s also crucial to remember that RSI is a relative measure, not an absolute predictor. An RSI below 30 doesn’t guarantee a stock will bounce back. It simply tells you the stock is in an oversold condition. Sometimes, stocks in strong downtrends can stay below 30 for a long time. This is why looking at other information is always smart.

Uncovering Opportunities: Why RSI Below 30 Signals Potential for Undervalued Indian Stocks

When the RSI dips below 30, it’s like a car speedometer dropping very low—it tells you the “speed” of price decline has been high. This sharp drop often catches the eye of investors looking for undervalued Indian stocks RSI signals.

The Idea of Mean Reversion

The main reason why an RSI below 30 can signal an opportunity is linked to something called “mean reversion.” Think of it like a stretched rubber band. If you stretch it too far in one direction, it usually snaps back towards its normal position. In the stock market, this means that if a stock’s price goes down too much, too fast (making its RSI very low), it might be ready to “snap back” and go up again. This “oversold” condition often happens when sellers get too emotional or react too strongly to some news, pushing the price lower than it should be.

Identifying Truly Undervalued Shares

Undervalued Indian stocks RSI readings are those where the price drop seems much bigger than what the company’s real worth or “fundamentals” would suggest. It’s like finding a good quality item on sale for a very low price. The low RSI might suggest the market has temporarily misjudged the stock’s true value, creating a chance to buy.

The “Dead Cat Bounce” Trap

However, not every stock with a low RSI is a true bargain. Sometimes, a stock might have a small, quick bounce upwards after a big drop, only to fall even further. This is called a “dead cat bounce.” It means the temporary price rise doesn’t last. This is why it’s super important to look for additional confirmation beyond just the RSI. You need to tell the difference between a quick, fake bounce and a real recovery.

A Quick Checklist for Evaluating Low-RSI Signals

To avoid the “dead cat bounce” and find genuine recovery chances, here’s a short checklist to consider when you see an Indian share with low RSI:

• Trend Context: Is the overall market or the stock’s sector in a long-term uptrend or downtrend? An oversold stock in a strong overall downtrend might keep falling. An oversold stock in a generally good market might recover faster.
• Volume: When the stock starts to move up from its oversold level, is there a lot of trading activity (high volume)? Strong buying volume can confirm that many people believe the stock is now a good buy.
• Recent News: What caused the stock to drop so much? Was there bad company news (like lower profits), or was it just general market worries? If the core business is still strong, the drop might be a good chance. If the business itself is having big problems, even a low RSI might not be a good signal.

By looking at these extra points, you can make better choices about which stocks under 30 RSI India are worth your attention.

Spotlight: Dixon Technologies (RSI Below 30)

Let’s look at an example. Dixon Technologies RSI below 30 has been a focus for some investors. Dixon Technologies (DXN) is a company that makes electronics for other brands, including TVs, washing machines, and mobile phones.

As of our last check in early December 2023, Dixon Technologies (DXN) showed an RSI of approximately 27 on the daily chart, placing it firmly in the oversold category. This low RSI signaled that its shares had experienced a significant price decline in recent trading periods. This meant that the selling pressure had been very strong, pushing the stock’s price down quickly.

What Happened to the Price?

Imagine looking at a simple line chart of Dixon’s stock. You would see a clear recent dip in its share price. This dip caused the RSI line to cross below the 30-mark. Sometimes, during such a fall, a stock might hit certain “support levels”—prices where many buyers have stepped in before, stopping the fall temporarily. For Dixon, a key question for analysts was whether the stock was reaching such a support level after its sharp drop.

Why Did the Price Dip?

There can be several reasons why a stock like Dixon Technologies might see its price fall and its RSI dip:

• Earnings Miss: If the company announces profits that are lower than what experts expected, investors might sell their shares.
• Sector Slowdown: If the whole electronics manufacturing industry faces challenges, all companies in that sector, including Dixon, can be affected.
• Macro-economic Factors: Bigger economic issues, like high interest rates or inflation, can make investors less willing to buy stocks, leading to widespread selling.

When the RSI is low, some market observers might label it a Dixon Technologies undervalued stock. They consider the company’s strong business in electronics manufacturing and its growth potential. If the stock’s current price-to-earnings (P/E) ratio or price-to-book (P/B) ratio seem lower than its historical averages or its competitors’ ratios after the dip, it adds to the argument that the stock could be a bargain. (Investors would need to check the most current P/E and P/B ratios from financial websites for a real-time assessment).

What Investors Might Do Next

For investors watching undervalued Indian stocks RSI signals like Dixon’s, here are some typical next steps:

• Watch for an RSI Bounce: They would look for the RSI line to start curving upwards and cross back above 30, which could signal that buying interest is returning.
• Confirm with Volume: They would check if this RSI increase comes with higher trading volumes, meaning more people are buying.
• Check Fundamentals: They would review Dixon’s latest financial reports to make sure the company’s core business is still strong and that the recent price dip wasn’t due to serious long-term problems.

(Source for Dixon’s news and price movement would need to be added here by an expert with access to real-time financial news, e.g., a specific news article URL).

Spotlight: SKF India (RSI Below 30)

Another important example for investors watching the Indian shares with low RSI list is SKF India. SKF India makes bearings and related products for many industries, including cars and manufacturing plants.

As of recent market observations, SKF India’s (SKFINDIA) RSI stood at approximately 28 on its daily chart. This reading shows that the stock had recently entered the “oversold” zone. This means its shares saw a significant and fast price drop in a short time.

Recent Price Movements and Influences

SKF India experienced a sharp decline in its share price leading up to its low RSI reading. This decline can be influenced by several factors, often related to the broader industrial sector. For example:

• Industrial Slowdown: If the manufacturing sector in India or globally slows down, companies like SKF, which supply parts to these industries, can see lower demand for their products. This can hurt their earnings and stock price.
• Foreign Exchange Impact: For companies that import or export a lot, changes in currency values can affect their profits. A strong Indian Rupee or other currency shifts might impact SKF India’s earnings.

Despite these price pressures, SKF India might be perceived as an SKF India undervalued stock by some analysts. This view comes from looking at the company’s strengths:

• Strong Order Book: Even during economic slowdowns, if SKF India has many confirmed orders for future delivery, it shows ongoing demand for its products.
• Low Debt: A company with little debt is usually more stable and better able to handle tough economic times.

However, the recent price pressure indicates that the market might be more focused on the current challenges than on these strengths.

A Quick Look at Fundamentals

When a stock like SKF India shows a low RSI, it’s wise to glance at its basic financial health, known as fundamentals. Investors would look for:

• Revenue Growth: Is the company still selling more products year after year?
• Net Profit Trend: Is it still making good money?
• Overall Business Health: Is the company strong and stable in the long run?

These points give context to the technical RSI signal.

Technical Outlook

From a technical perspective, once SKF India’s RSI dips to 28, investors would start looking for signs of recovery. They would watch for:

• Potential Support Zones: These are price levels where the stock has stopped falling in the past and started to go up.
• RSI Trending Upward: A key signal would be the RSI line moving up and crossing back above 30, showing that sellers are losing control and buyers are returning.

(To see more about stocks crossing below 30 RSI, you can often find articles covering multiple companies, such as this one from Economic Times: Economic Times)

Finding Your Own RSI Below 30 Stock List India

You don’t have to wait for someone else to tell you which Indian stocks trading at RSI below 30 are out there. There are many tools available to help you create your very own RSI below 30 stock list India. These tools, often called “stock screeners,” allow you to filter thousands of stocks based on specific criteria like RSI.

Popular Screening Tools for Stocks Under 30 RSI India

Here are some popular platforms you can use to find stocks under 30 RSI India:

• Tickertape: This platform offers a powerful stock screener with over 200 filters. You can easily set a filter for “RSI < 30” and add other conditions like a minimum market capitalization (e.g., greater than ₹500 Crore) to focus on larger, more stable companies.
• Screener.in: This website is known for its strong fundamental screening, but it also has technical filters. They even have a pre-built screen called “RSI Oversold Stocks” that you can use directly. As of a recent check, it might show around 41 results. Screener.in
• BlinkX: BlinkX provides a real-time oversold screener, which is great for seeing current market data. BlinkX
• Dhan: Dhan also offers a daily list of stocks with RSI below 30, making it easy to keep track of new opportunities. Dhan
• Motilal Oswal: Financial firms like Motilal Oswal sometimes publish curated lists of oversold stocks, which can give you a starting point. They might highlight a small number of stocks that their analysts believe have potential. Motilal Oswal

Step-by-Step Guide to Using a Screener

Finding Indian shares with low RSI is quite straightforward with these tools:

1. Choose a Platform: Pick one of the screeners mentioned above, like Tickertape or Screener.in, that you find easy to use.
2. Set the RSI Filter: Look for the “RSI” filter and set it to “< 30” (or sometimes “less than or equal to 30”). This will show you all the stocks that are currently in the oversold zone.
3. Add Secondary Filters: To refine your list and focus on good quality stocks, add more filters. For example:
   • Average Volume: Set it to “> 1 Lakh” (meaning over 100,000 shares traded daily) to ensure the stock is actively traded and easy to buy or sell.
   • Market Capitalization: Filter for companies above a certain size (e.g., large-cap or mid-cap) if you prefer more established businesses.
   • Sector: You might want to filter by industry if you’re interested in a specific part of the economy, like technology or pharmaceuticals.
4. Export or Bookmark the List: Once you have your refined list, you can usually export it to a spreadsheet or save/bookmark the screen for quick access later.

It’s important to remember that these RSI below 30 stock list India tools update daily. Stock prices and RSI values change constantly. Always verify the data timestamp to ensure you are looking at the most current information.

Beyond Indian Companies RSI Indicators: Holistic Analysis for Low-RSI Stocks

While Indian companies’ RSI indicators are a fantastic starting point for finding potential bargains, relying solely on RSI can be a big mistake. As we discussed, a stock can stay oversold for a long time, or a bounce might be short-lived. To make truly smart investment decisions, you need to look at the bigger picture. This means combining RSI with other tools and information.

Technical Add-ons: More Chart Signals

After identifying Indian shares with low RSI, these technical tools can help confirm if a reversal is likely:

• Volume Spikes: When a stock starts to turn around from its oversold condition, look for a sudden increase in trading volume. This means many buyers are stepping in, which can confirm that the upward movement is real and strong.
• Moving Averages (50-day SMA/200-day SMA): These lines smooth out price data to show the overall trend. If the stock’s price starts to cross above its 50-day Simple Moving Average (SMA), or even better, its 200-day SMA, it can signal a change from a downtrend to an uptrend. These are like long-term road maps for the stock’s journey.
• MACD Crossovers: The Moving Average Convergence Divergence (MACD) is another momentum indicator. When its two lines cross each other in a certain way, it can give another signal that the momentum is shifting from selling to buying.
• Bollinger Bands: These bands show how much a stock’s price usually moves. When a stock’s price goes below the lower Bollinger Band and then starts moving back towards the middle, it can indicate that the price was stretched too far down and is now correcting.

Fundamental Checklist: Understanding the Business

Technical charts tell you what the price is doing, but fundamental analysis tells you why it might be doing it. For undervalued Indian stocks RSI signals, checking the company’s health is critical:

• Revenue & Earnings Growth YoY (Year-over-Year): Is the company selling more goods or services and making more profit compared to last year? Consistent growth shows a healthy business.
• Debt-to-Equity and Cash-flow Health: Does the company have too much debt? Is it generating enough cash from its operations? A company with low debt and strong cash flow is usually safer.
• Valuation Multiples vs. Industry Peers: How expensive is the stock compared to other companies in the same industry? Look at things like Price-to-Earnings (P/E) ratio and Price-to-Book (P/B) ratio. If an oversold stock’s P/E is much lower than its competitors, it might indeed be undervalued.
• Recent News/Events: What’s been happening with the company? Any new product launches, important government rule changes (regulatory news), or major economic reports (macro data) that could affect its future? Positive news can boost a recovering stock.

Risk Management Tips

Even with careful analysis, investing always has risks. Here are some ways to manage them when looking at technical analysis Indian stocks RSI:

• Set Stop-Loss Orders: This is an instruction to sell your stock automatically if its price drops below a certain point. It helps limit how much money you can lose if the stock continues to fall even after showing a low RSI. A common practice is to place it just below a recent “swing low” (the lowest point before a small bounce).
• Position Size Based on Portfolio Risk Tolerance: Don’t put all your money into one stock, especially a potentially risky one. Decide how much of your total investment money you are comfortable putting into any single stock.
• Monitor for RSI Divergence: This is a powerful signal. If a stock’s price keeps falling and making new lows, but its RSI starts to rise (making higher lows), it’s called a bullish divergence. This can be a strong early sign that the selling pressure is weakening, and a significant rebound might be coming soon.

By using a blend of these technical and fundamental checks, you can greatly improve your chances of making wise decisions with Indian shares with low RSI.

Conclusion – Strategically Approaching Indian Shares with Low RSI

Finding Indian stocks trading at RSI below 30 can be a great starting point for your investment journey. It helps you quickly spot companies that have seen a big price drop, possibly putting them in “oversold” territory. This condition often sparks interest among investors looking for shares that might be undervalued Indian stocks RSI signals.

However, the real secret to success isn’t just finding these stocks. It’s about how you approach them. We cannot stress enough the need for due diligence. This means taking the time to truly understand what you are investing in. Always combine the RSI signal with other technical tools, like checking trading volume and moving averages, to confirm that buying interest is truly returning. Even more importantly, dive into the company’s fundamental analysis. Look at their profits, debts, and future plans. Only after this thorough check can you confidently consider a stock as genuinely undervalued.

We encourage you to regularly check the RSI below 30 stock list India using the screeners we discussed, like Screener.in or Tickertape. Make it a habit to apply the outlined workflow: spot the low RSI, then dig deeper with other technical indicators, and finally, check the company’s financial health. By doing this, you can build a strong watchlist of potential opportunities and increase your chances of finding those promising Indian shares with low RSI before others do. Start exploring and building your understanding today!

Appendix (Example for Low-RSI Stock Data)

Here is a table template showing how you might organize data for Indian stocks trading at RSI below 30. Please note that the “Current RSI,” “52-Wk Low/High,” “P/E,” and “Market Cap” values below are placeholders. Actual, real-time data should be sourced and inserted by the team for accuracy.