Why Asian Paints, Berger Paints shares are falling? Experts list out reasons

Shares of Asian Paints and Berger Paints extended its fall on second straight session on Thursday. Asian Paints share price today opened with downside gap and hit intraday low of ₹2740.50 levels whereas Berger Paints share price today opened lower and hit intraday low of ₹547 apiece levels. In last two sessions, Berger Paints shares have fallen from ₹610.50 to ₹547 levels, logging more than 10 per cent dip whereas Asian Paints share price has fallen from ₹3096 to ₹2740.50 levels, descending to the tune of 11.50 per cent in last two sessions.

According to stock market experts, paint stocks are correcting because Aditya Birla Group firm Grasim Industries has doubled the capex for its foray into the paints business to ₹10,000 crore and expects to start production from the fourth quarter of 2023-24. In August 2021, company board had approved ₹5,000 crore for foraying into the paint manufacturing business. Market experts said that paint stocks are expected to remain under the sell-off heat and advised positional investors to avoid taking any fresh position in the counter.

Speaking on the reason for dip in stock price of paint majors, Ravi Singhal, Vice Chairman at GCL Securities said, “Aditya Birla group company Grasim Industries has announced to foray into paint business and it has doubled its capex for paints business as well. The company has also announced that it is expecting to start paint production from Q4FY24.” He said that paint stocks are already under pressure due to spike in crude oil prices after Russia-Ukraine war.

Expecting sell-off in Asian Paints and Berger Paints to further continue, Sumeet Bagadia, Executive Director at Choice Broking said, "Both paint stocks are looking weak on chart pattern and there can be some more sell-off expected in these paint stocks. Asian Paints share price may go up to ₹2550 per share levels whereas Berger Paints may go down up to ₹480 per share levels."

"At least 10 per cent further correction in both Asian Paints and Berger Paints shares are expected from current levels," said Ravi Singhal of GCL Securities.

Grasim Industries is setting up five to six plants. The civil construction has already commenced at two of its plant sites -- Panipat and Ludhiana -- and is expected to start shortly at Chamarajanagar, in Karnataka.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.