Bajaj Finance, Bajaj Finserv can fall another 10% from the current levels

Both the stocks have broken major supports and a further downside seems inevitable

Bajaj twins - Bajaj Finance and Bajaj Finserv - have been battered in the last few trading sessions. The 8 per cent fall in the last three days alone came on the back of a report by global research and broking house CLSA, which initiated a 'Sell' rating on Bajaj Finance with a target price of Rs 6,000 per share. 

CLSA said the stock was likely to “undershoot expectations in the medium –term”. The report cited “a large base, decline in customer repeat purchase ratio and rising competitive intensity in core segments posing risks to its medium-term loan growth.” READ ABOUT IT HERE

In Thursday's trade, however, Bajaj Finance recovered some losses and was quoted nearly 2.5 per cent higher at Rs 7020 levels in intraday deals. It's twin Bajaj Finserv, too, traded 0.6 per cent higher at 16,772 levels. In comparison, the S&P BSE Sensex was hovering at 57,988 levels, up a modest 0.35 per cent.

Here's how you should approach these two stocks from a short-to-medium term perspective.

Bajaj Finserv Ltd (BAJAJFINSV)
Likely target: 15,000 (after breaching 100-DMA)
Downside potential: 10%

The formation of “Head and Shoulder” pattern has dismantled the upside bias. Moreover, the stock has been unable to conquer the 50-day moving average (DMA) positioned at Rs 17,800. As of now, the downside is protected near 16,800 levels, which is its 100-DMA. Any decisive move under this support level may result in decline of over 10 per cent towards 15,000 levels, as per the daily chart.  CLICK HERE FOR THE CHART

Bajaj Finance Ltd (BAJFINANCE)
Likely target: Rs 6,400
Downside potential: 10%

After breaching 50-DMA, Bajaj Finance has failed to hold the support of 100-DMA placed at Rs 7,000 levels. This stock faces a stiff resistance at Rs 7,500. As long as the stock trades below this crucial mark, it may head in the direction of Rs 6,400 levels, which is its 200-DMA, according to the daily chart. The overall trend looks weak. Unless a strong up move supported by volumes does not emerge, bears will continue to dominate the bulls in this counter. CLICK HERE FOR THE CHART