Bajaj Fin, LIC Hsg: Good time to buy NBFC stocks? Here's what charts say

One can expect up to 7 per cent gain in NBFC stocks if the positive momentum is held decisively

Most non-bank finance companies' (NBFCs') stocks failed to clock gains in the month of April amid resurgence in the Covid-19 cases. Investor confidence took a hit as macroeconomic environment began weakening after numerous states announced localised restrictions, denting consumption and industrial activity.     

So far in the month of April, only a handful of NBFCs have been able to generate positive returns. SREI Infrastructure Finance, for instance, has surged 38.6 per cent on the NSE while IDFC, Bajaj Finance, and Muthoot Capital Services have rallied between 4 per cent and 9 per cent, ACE Equity data show. On the downside, CreditAccess Grameen, L&T Finance, Manappuram Finance, and Shriram Transport Finance have slipped up to 10 per cent. In comparison, the Nifty50 index has slipped 1.3 per cent during the period.

However, over the past one week, tides have turned and the stocks have outperformed at the bourses. Bajaj Finance, Spandana Sphoorty, Sundaram Finance, Cholamandalam Investment and Finance, Muthoot Capital Services, and Bajaj Holdings have surged in the range of 3 per cent to 17 per cent as against a 3.8 per cent rally in the 50-share index.

So, is it a good time to look at NBFC stocks? Here's what charts show:

LIC Housing Finance Ltd (LICHSGFIN)

Likely target: Rs 454 (after crossing Rs 423)

Upside potential: 6.82%

For nearly two years, the stock has resisted the 200-weekly moving average (WMA). The same is acting as a firm obstacle now, currently placed at Rs 454 levels. The present momentum suggests a support of 100-WMA placed at Rs 372-mark. The immediate resistance comes at 50-days moving average (DMA), placed at Rs 423. An up move above this resistance may see an upside rally towards Rs 454, which is its 200-WMA, as per the technical charts. CLICK HERE FOR THE CHART
 
Bajaj Finance Ltd (BAJFINANACE)

Likely target: Rs 5,670 - Rs 5,800

Upside potential: 4.61% - 7.01%

The stock managed to hold the support of 200-DMA firmly even during the recent correction. The rebound has seen the strength crossing 100-DMA an 50-DMA successfully. This reflects the build-up of a positive momentum with direction staying in upward mode. Now, as long as the stock defends the support of 50-DMA on closing basis, currently placed at Rs 5,220 levels, the stock is expected to rally towards higher levels of Rs 5,670 and Rs 5,800. CLICK HERE FOR THE CHART
 
Manappuram Finance Limited (MANAPPURAM)

Likely target: Rs 160 (if sustains above Rs 148)

Upside potential: 8.11%

With a negative crossover of 200-DMA and 50-DMA, the stock may enter into a bearish segment below the neckline support of Rs 140 levels. However, if it manages to sustain above the horizontal resistance of Rs 148 levels on the closing basis, the upside bias may push the stock towards the next resistance of Rs 160 mark, as per the daily chart. The Relative Strength Index (RSI) has crossed the resistance of 48 mark, which indicates a positive strength. CLICK HERE FOR THE CHART
 
Indiabulls Housing Finance Ltd (IBULHSGFIN)

Likely target: Rs 205 and Rs 209 (anly after breakout above Rs 195)

Upside potential: 5.13% - 7.18%

This stock has broken the 200-DMA which is placed at Rs 195 levels. Going-forward, unless the moving average is not conquered, the upside rally may witness selling pressure at higher levels. Only when the stock decisively closes above 200-DMA, it may see a rise towards Rs 205 and Rs 209 levels. The immediate support comes at Rs 170 levels. CLICK HERE FOR THE CHART
 
Shriram Transport Finance Co. Ltd (SRTRANSFIN)

Likely target: Rs 1,510 (if the 50-DMA is defended)

Upside potential: 7.40%
This stock has managed to conquer 50-DMA moving average placed at Rs 1378 levels. This move is supported by the Moving Average Convergence Divergence (MACD), which is attempting to cross the zero line upward. The overall trend indicates a rally towards Rs 1,510 levels if the 50-DMA is defended. The positive bias is intact as long as the 100-DMA, placed at Rs 1,276 levels, is held as a support, as per the daily chart. CLICK HERE FOR THE CHART