Bajaj Finance Ltd, which has more than doubled in the last year compared to a 55 percent rally in the Nifty50, is back on the buyers’ radar. If the momentum continues, the stock can hit Rs 7,000-8,000 in the medium term, technical experts say.
If we exclude the price action on June 10, the stock underwent consolidation in the first three trading days of the week after the non-bank lender said it could see higher non-performing assets in the first six months of FY22 due to the COVID-induced lockdowns.
The company was providing an update on the impact of the second wave on its financials in FY22.
With daily cases slipping below the 100,000-mark, vaccination picking up pace and the arrival of monsoon, which is expected to be normal, the impact on the economy could be limited.
The Department of Economic Affairs, too, said in its monthly report that the economic impact of the second wave was likely to be restricted to the first quarter.
Bajaj Finance along with seven other stocks in the S&P BSE finance index hit a fresh 52-week high on June 10. Bajaj Finance closed with gains of 7.2 percent on the BSE at Rs 6,087 after hitting a 52-week high of Rs 6115.85.
“Bajaj Finance (BAF) reiterated that financial impact of COVID 2.0 has been much milder vs the first wave, with BAF remaining open for business across all categories,” Morgan Stanley said in a note on June 10 based on takeaways from an investor call.
“While May’21 bore the full impact of localised lockdowns with business volumes declining to 40-60 percent of planned levels, the pick-up in early June 2021 (especially in high-frequency B2B business) has been strong with BAF hoping to reach 75-80 percent of Mar’21 levels post 14th June 2021 with full normalisation by early July,” it said.
The global investment bank has a price target of Rs 6,290 on the stock, which translates into an upside of 3 percent from June 10 closing price of Rs 6,087.
Bajaj Finance made a strong bullish candle on the daily charts. The stock also closed above its five-day exponential moving average on June 10.
“If we look at a larger perspective then it was a much-awaited breakout in the financial giant above the 6,000-mark. Technically, the latest breakout could have a theoretical target of 8,000 but we feel then the stock might start losing momentum near 7,000,” Mehul Kothari, AVP – Technical Research at AnandRathi told Moneycontrol.
“As of now, it is poised for further more upside. We won’t be surprised if we see 7,000 in this series. Support on the downside is placed at Rs 5,500, and a move below the same would halt the entire momentum,” he said.Disclaimer
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