Following the Reserve Bank of India's (RBI) action against some corporations, which cited non-compliance and regulatory failures as the reason for the action, the shares of non-banking financial companies (NBFCs) have been declining in recent times.
It was observed that equities from the non-bank financial company (NBFC) sector displayed a mixed trend on Thursday. Is the selling process over, or will there be more suffering to come in the future? The following is what the charts indicate.
The price of the stock reached a low of Rs 6,190 on Wednesday, but it did not remain there for long. Candlestick patterns are a representation of the creation of a hammerhead. Generally speaking, the presence of this particular pattern in a downward trend implies that the stock is attempting to identify a bottom.
Aside from that, the stock had reached a level that had not been tested since June 2020, which is its 200-WMA (Weekly Moving Average). Yesterday, the stock had gotten within striking distance of this level. As of now, the 200-WMA is hovering around Rs 6,085. Both of these developments, therefore, point to the possibility that the stock is currently in the process of making a bottom around the levels of Rs 6,100. Please also read: Bajaj Finance falls by 5%, reaches a 10-month low, and extends its year-to-date decline to 15%
Moving forward, to have any possibility of a pullback rebound, the stock must keep trading at levels that are continuously higher than Rs 6,330. The 20-day moving average (DMA) is located at Rs 6,580, which is considered to be a near obstacle for the stock. Beyond this level, the stock has the potential to surge to Rs 6,800 levels.
When looking at the daily and weekly time frames, L&T Finance is on the verge of going into a bearish position. Even though the stock has gained three percent today, it is currently trading at a price that is lower than its 20-DMA (Daily Moving Average) and its 50-DMA, which are respectively Rs 170 and Rs 169. The twenty-day moving average (DMA) appears to be moving closer to the fifty-day moving average (DMA), and the short-term trend will turn negative as soon as it falls below the fifty-day DMA.
Additionally, every week, the stock is seen testing its major 20-WMA support at Rs 159. This is a significant development. Following its breakthrough in late April 2023, the stock has been able to maintain a position above the 20-week moving average (WMA) for the past eleven months.
Significant momentum oscillators, on the other hand, have shifted to a negative state on both the daily and weekly scales. As a result, there is a possibility that the stock will experience some downward pressure shortly. The 50-week moving average (WMA) is located at Rs 134, and a break and closure below Rs 159 can cause a slide towards Rs 134.
If there is a decline, it is anticipated that the stock will encounter strong resistance somewhere around Rs 180.
Following the influx of funds from Fairfax, IIFL Finance was unable to move beyond the 10 percent upper limit on Thursday, following two trading days in a row in which the company had a 20 percent decrease in its circuits.
The stock appears to be making a comeback from levels of oversold conditions. On the other hand, it is quite probable that the rebound will only be temporary, as the stock is anticipated to encounter significant resistance in the range of Rs 450 to Rs 470. Multiple time frames show that the stock is currently trading below its major moving average, which is a result of the recent steep decline in its price.
Indeed, the stock is currently trading below its 20-MMA (Monthly Moving Average) for the very first time since December 2020. This is a significant development. A twenty-meter dash (MMA) costs Rs 500. The stock will likely be subjected to downward pressure unless it can bounce above this level.
There is a possibility that the stock will test its 50-month moving average, which is now located around Rs 330. Around Rs 390 is the level of support that may be anticipated in the meantime.
It appears that the shares of Manappuram Finance are in a perilous position, as the stock is currently testing its major support at its 20-week moving average, which is currently at Rs 167. On the other hand, because there is a clear negative divergence in major momentum oscillators such as the RSI (Relative Strength Index), Stochastic Slow, and the MACD (Moving Average Convergence-Divergence), the stock may have a break to the downside.
A weekly close that is lower than its 20-week moving average has the potential to set off a decline toward the Rs 143 level. At Rs 178 and Rs 180, the 50-day moving average (DMA) and the 20-day DMA are seen to be the immediate obstacles on its path up.
On Wednesday, JM Financial reached a low of Rs 76.40, which was the point at which it broke below its 200-day moving average. The stock, on the other hand, is currently trading at a price that is higher than its 200-day moving average, which is currently at Rs 86.40.
On the long-term charts, the stock appears to be in a favorable position, and it is anticipated that it will receive significant support around the Rs 82 level. Based on the trend, it appears that the present downturn would most likely bring the stock to Rs 97. There is a possibility that there would be some resistance around Rs 90 in the interim.