IIFL, Manappuram, L&T Finance: These NBFCs can fall another 22%; here's why

Among the frontline NBFCs, Bajaj Finance looks interestingly poised, with the stock attempting to form a bottom following a 17 per cent decline since mid January, suggests technical chart.

Shares of non-banking financial companies (NBFCs) have been on slippery ground off late, following RBI's action against select firms citing non-compliance and regulatory lapses.

However, on Thursday stocks from the NBFC sector were seen displaying a mixed trend. Is the selling done with or will there me further pain ahead? Here's what the charts suggest.

Bajaj Finance

Current Price: Rs 6,390

Upside Potential: 6.4%

Support: Rs 6,330; Rs 6,190; Rs 6,085

Resistance: Rs 6,580

Bajaj Finance has been trading with a negative bias since the breakdown in mid-January, post which the stock has shed 17 per cent in the following period.

On Wednesday, the stock a low at Rs 6,190, and then bounced back strongly. The candle stick patterns show formation of an hammer. This particular pattern in a downtrend generally indicates that the stock is attempting to define a bottom. CLICK HERE TO VIEW CHART

That apart, yesterday the stock had come within striking distance of its 200-WMA (Weekly Moving Average), a level not tested since June 2020. The 200-WMA stands at Rs 6,085-odd levels. Thus, both these developments suggests that the stock may be in the process of forming a bottom around Rs 6,100 levels.

Going ahead, the stock needs to consistently trade above Rs 6,330 levels for hopes of a pullback rally. Near hurdle for the stock is seen at Rs 6,580, which is the 20-DMA, above which the stock can potentially rally to Rs 6,800 levels.

L&T Finance Holdings

Current Price: Rs 164

Downside Risk: 18.3%

Resistance: Rs 169; Rs 170

Support: Rs 159

L&T Finance is on the verge of turning bearish on the daily and weekly time-frame. Depsite today's 3 per cent gain, the stock is presently seen quoting below its 20-DMA (Daily Moving Average) and the 50-DMA at Rs 170 and Rs 169. The 20-DMA seems to be converging towards the 50-DMA, as and when it slips below the 50-DMA, the short-term trend will become negative. CLICK HERE TO VIEW CHART

Further, on the weekly scale, the stock is seen testing its key 20-WMA support at Rs 159. The stock in the last 11 months has managed to sustain above the 20-WMA post its breakout in late April 2023.

However, key momentum oscillators have turned negative on both the daily and weekly scale. Hence, the stock may see some downward pressure in the near-term. Break and close below Rs 159, can trigger a fall towards Rs 134 - wherein stands the 50-WMA.

In case of a pullback, the stock is expected to face stiff resistance around Rs 180.

IIFL Finance

Current Price: Rs 421

Downside Risk: 21.6%

Resistance: Rs 450 - Rs 470; Rs 500

Support: Rs 390

After two trading days of back-to-back 20 per cent lower circuits, IIFL Finance was locked at the 10 per cent upper limit on Thursday following Fairfax fund infusion.

The stock seems to be recovering from oversold levels. However, the recovery is likely to be short-lived with the stock expected to face considerable resistance in the Rs 450 -Rs 470 zone. With its recent sharp fall, the stock is seen trading below its key moving average on multiple time-frames. 

In fact, the stock is presently trading below its 20-MMA (Monthly Moving Average) for the first time since December 2020. The 20-MMA stands at Rs 500. Unless, the stock does not bounce above this, it will likely face downward pressure.

On the downside, the stock may test its 50-MMA, which stands around Rs 330 levels. In the interim, support can be expected around Rs 390. CLICK HERE TO VIEW CHART

Manappuram Finance

Current Price: Rs 175

Downside Risk: 18.3%

Resistance: Rs 178; Rs 180

Support: Rs 167

Shares of Manappuram Finance seems to be precariously poised, with the stock testing its key support at its 20-WMA which stands at Rs 167. However, given the clear negative divergence in key momentum oscillators like the RSI (Relative Strength Index), Stochastic Slow and the MACD (Moving Average Convergence-Divergence) the stock could possibly see a downside break.

A weekly close below its 20-WMA, can trigger a fall towards Rs 143 levels. On its way up, the 50-DMA and the 20-DMA at Rs 178 and Rs 180 are seen as the immediate hurdles. CLICK HERE TO VIEW CHART

JM Financial

Current Price: Rs 87

Upside Potential: 11.5%

Support: Rs 82

Resistance: Rs 90

JM Financial cracked below its 200-DMA on Wednesday as it plunged to a low of Rs 76.40. The stock, however, is presently seen quoting above its 200-DMA which stands at Rs 86.40.

The stock seems to be favourably placed on the long-term charts, with strong support expected around Rs 82 levels. The current pullback will likely lead the stock to Rs 97 suggests chart. In the interim, some resistance can be expected around Rs 90. CLICK HERE TO VIEW CHART