The stock market often presents opportunities where fundamentally strong stocks are trading in the oversold zone. One of the key indicators to identify such opportunities is the Relative Strength Index (RSI).
What is RSI & Why Does It Matter?
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements on a scale of 0 to 100.
- RSI above 70: Indicates the stock might be overbought and due for a correction.
- RSI below 30: Suggests the stock is oversold and could present a buying opportunity.
- Typically, RSI is calculated over 14 days to gauge market trends.
When a fundamentally strong stock has an RSI below 25, it signals that the stock may be oversold, providing a potential entry point for long-term investors. Here are some undervalued stocks currently in the oversold zone:
Top Fundamentally Strong Stocks with RSI Below 25
1. JK Paper (RSI: 21.67) 📉
JK Paper Ltd. is a leading manufacturer of paper and packaging board products in India. It operates advanced manufacturing units and has a strong domestic and global market presence. Given its low RSI, it may be poised for a recovery.
2. Carborundum Universal (RSI: 19.52) 🏭
Carborundum Universal Ltd. (CUMI), part of the Murugappa Group, specializes in abrasives, ceramics, and electro-minerals. With a presence in over 40 countries, its global reach makes it a strong contender in the manufacturing sector.
3. Kirloskar Oil Engines (RSI: 13.69) 🚜
Kirloskar Oil Engines Ltd. is a major player in diesel engines, power generation, and agricultural equipment. Despite its strong fundamentals, its RSI suggests it is significantly oversold, making it worth watching.
4. Natco Pharma (RSI: 20.49) 💊
Natco Pharma Ltd. is a leading pharmaceutical company specializing in generic medicines and oncology drugs. With a strong international presence, its low RSI may indicate a potential rebound in the near future.
5. Welspun Enterprises (RSI: 24.10) 🛣️
A key infrastructure development company, Welspun Enterprises specializes in roads, highways, and oil & gas projects. Given India’s focus on infrastructure growth, its oversold status could present an opportunity.
6. Orchid Pharma (RSI: 22.40) 🏥
Orchid Pharma Ltd. focuses on the development of active pharmaceutical ingredients (APIs) and finished dosage formulations. With a strong presence in antibiotics and US FDA-approved facilities, this stock remains an attractive long-term bet.
7. Sula Vineyards (RSI: 22.37) 🍷
India’s largest wine producer, Sula Vineyards has pioneered the country’s modern wine industry. Its oversold RSI could indicate a good entry point for investors looking at the consumer goods sector.
8. KNR Construction (RSI: 23.27) 🚧
KNR Constructions Ltd. is a leading infrastructure development company specializing in roads, irrigation, and urban projects. With a solid order book and execution capabilities, it remains a strong contender for recovery.
Final Thoughts
Investing in fundamentally strong stocks that are currently oversold can be a smart strategy for long-term gains. However, RSI alone should not be the deciding factor—always consider additional indicators like earnings growth, debt levels, and industry trends before making an investment decision.
These stocks have strong fundamentals and are currently in the oversold zone, making them worth monitoring for a potential rebound. Keep an eye on their price action and broader market trends for the best entry points!
