Bajaj Finance, Manappuram: How to trade NBFC stocks in a volatile market?

After being in a spot of bother since the IL&FS crisis in 2018 and the Covid-19 making life even more difficult for them, non-banking financial companies (NBFC) are now getting access to cheaper cost of funds, but their credit profile is simultaneously slipping. Rating agencies have warned of a huge pile-up in non-performing assets (NPA). Measures taken by the RBI — such as targeted long-term repo operations (TLTRO) — have helped ease the liquidity pressure to an extent. READ ABOUT IT HERE

Over the past few sessions, most NBFC stocks have gained ground. Here are the key levels to watch in select counters basis their technical chart pattern.

Mahindra & Mahindra Financial Services Ltd (M&MFIN): The counter is attempting to cross its 100-day moving average (DMA), placed at Rs 208.30 levels. If the stock manages to conquer this level decisively, the overall trend may remain positive and the counter can then move towards Rs 273 levels, its 200-DMA. The Relative Strength Index (RSI) has entered the overbought condition - a sign of likely profit booking over the medium-term. The current momentum, however, remains strong and is likely to sustain for now. CLICK HERE FOR THE CHART
 
Bajaj Finance Ltd (BAJFINANACE): The stock is witnessing profit booking above Rs 3,400 levels. The RSI has entered overbought condition. Earlier when it did enter thiz zone, Bajaj Finance did not show any major correction. The overall trend is bullish till the support of Rs 3,300 is held on a closing basis.  The gap-up closes further hint at the underlying positive sentiment.  CLICK HERE FOR THE CHART
 
Manappuram Finance Ltd (MANAPPURAM): The daily chart shows a clear upside with “Higher high, higher low” formation. That said, the weekly chart shows six positive closes on a continuous basis, which can trigger some profit booking. While there is no doubt that the overall trend looks positive till the stock trades above the 200-DMA placed at Rs 147 levels. The next breakout appears to be at Rs 178 - a zone which witnessed correction earlier as well. CLICK HERE FOR THE CHART
 
Muthoot Finance Ltd (MUTHOOTFIN): At the current juncture, this counter has been trading sideways. It appears that this stock can be avoided for now, but can be shortlisted for a buy opportunity at lower levels. The counter is witnessing selling pressure above Rs 1,200 levels and needs to decisively close above the resistance to attract volumes, which have been subdued. Also, the RSI and Moving Average Convergence Divergence (MACD) have made negative crossovers, signs of profit booking. CLICK HERE FOR THE CHART
 
Shriram Transport Finance Co. Ltd (SRTRANSFIN): The counter has gradually risen above Rs 700 levels, as per the daily chart. Going forward, the 100-DMA placed at Rs 775 needs to be conquered aggressively for the next leg of a rally. The RSI, too, has entered the overbought condition. The immediate support comes at Rs 690. The current trend has seen a rise in volume and can help the stock cross the 100-DMA in the sessions ahead.  CLICK HERE FOR THE CHART