LIC Housing Finance, HDFC: Trading strategies for housing finance companies

Barring PNB Housing Finance, other housing finance stocks indicate weakness, with selling pressure to mount further if crucial levels are breached.

Shares of housing finance companies will be in the spotlight after a mutual fund hiked stake in one of the largest housing finance provider. ICICI Prudential Mutual Fund raised its stake in LIC Housing Finance Company, a subsidiary of LIC, to 7.07 per cent by acquiring additional 2.03 per cent shares from the open market.

While shares of LIC Housing Finance have been a laggard in the current month, dwindling over 12 per cent, technically a move above Rs 430 may significantly bring a shift in the present trend. 

So far this month, barring PNB Housing Finance, other finance providers such as Indiabulls Housing Finance, Housing Development Finance Corporation, Can Fin Homes and Repco Home Finance have not done well. Only PNB Housing Finance shares gained 5 per cent, while others trade with negative returns. 

On Thursday, shares of all the housing finance companies were trading in red despite benchmark indices recouping their early morning losses. Indiabulls Housing Finance tumbled 4 per cent while,  Repco Home Finance and Can Fin Homes fell 2 per cent and 1 per cent each.

Here’s the technical outlook of housing finance companies:-  

LIC Housing Finance Ltd(LICHSGFIN)

Outlook: Breach of Rs 350 may lead to sell-off

There is a formation of “Double Top” on the daily chart of LIC Housing Finance. If the stock slips under Rs 350 and fails to show rebound, only then could trend enter a short-to-medium term bearishness. Stock may reach Rs 310 mark.

As of now, the immediate hurdles come to Rs 365, followed by Rs 370 levels. A decisive move over Rs 380 could spell a bullish shift in the stock. Thereafter, a rally towards Rs 400 and Rs 420 cannot be ruled out. CLICK HERE FOR THE CHART

PNB Housing Finance Ltd (PNBHOUSING)

Likely target: Rs 650 (Once Rs 600 is taken out)

Upside potential: 8%

At the moment, the shares of PNB Housing Finance are attempting to absorb all the selling pressure emerging at Rs 600 levels. When it succeeds, the breakout could see a bullish rally towards the next barrier of Rs 650. The immediate support for the stock exists at Rs 546 level, which is its 50-day moving average (DMA), held firmly since October last year. 

The overall medium-term trend has a cushion of Rs 520, which needs to be safeguarded on a closing basis. This support can bolster the current upward bias. CLICK HERE FOR THE CHART

  

Indiabulls Housing Finance Ltd (IBULHSGFIN)

Likely target: Rs 89

Downside potential: 7.50%

The stock is severely facing beating beneath the 200-DMA set at Rs 123.70 levels. The chart formations are hinting at a downside to its 52-week low of Rs 89. Furthermore, the counter is unable to see any accumulation near the oversold territory of the Relative Strength Index (RSI), indicating weakness and negative momentum. The trend is bearish, with every up move expected to be followed by another round of sell-off.  CLICK HERE FOR THE CHART

Housing Development Finance Corporation Ltd (HDFC)

Outlook: Sideways trend

Shares of Housing Development Finance Corporation are currently trading sideways in the broad range of Rs 2,750 – Rs 2,550, as per the daily chart.  Only a move out of this range could provide a clear direction of the trend. Once a breakout emerges, a rally of 400- 450 may arise in either direction.  

The recent trend points to a weakness, with reversal perceiving added selling pressure. The Moving Average Convergence Divergence (MACD) has tilted downward and if falls under the zero line, the weakness could see aggression.  CLICK HERE FOR THE CHART

Can Fin Homes Ltd (CANFINHOME)

Outlook: Breakout over Rs 600

The “Golden Cross” breakout of the Can Fin Homes shares has triggered a positive bias for a medium-term perspective.  The current weakness may be testing the support of Rs 553 and Rs 532, which are its 50-DMA and 100-DMA, respectively, but the underlying trend looks positive. The immediate hurdles are at Rs 580 and Rs 600. A move over Rs 600 could prompt fresh upside in the direction of Rs 660. CLICK HERE FOR THE CHART