HDFC Life, Muthoot Fin: 75% stocks in financial services index eye bull-run

The Nifty financial services index is poised to rally in the direction of 20,700 - 20,900 level, delivering an upside of 5 per cent.

The Indian domestic market, the BSE Sensex and Nifty 50 hit a new all-time high on Wednesday, but Nifty Financial Services was far ahead in reaching its new peak. 

The Financial Services  index sets a new record peak on Tuesday, with nearly three-quarter of stocks implying robust chart structures. In total, nearly 15 stocks are developing trend that might see a resilient sentiment witnessing an aggressive accumulation.

While HDFC Life Insurance Company, ICICI Lombard General Insurance Co, Muthoot Finance and ICICI Prudential Life Insurance Company have reached new 52-week high, trading set-up of Cholamandalam Investment and Fin Co, Bajaj Finserv, ICICI Bank, Power Finance Corporation and REC are experiencing determined accumulation near their respective support marks.

Furthermore, stocks like Shriram Finance, SBI Life Insurance Company, Bajaj Finance and Axis Bank are poised to achieve new all-time highs. 

Shares of Indian Energy Exchange and State Bank of India are trading sluggish, with price action still to recoup crucial levels; nevertheless the weakness seems to be deteriorating, and one cannot neglect sideways trend. 

With the exception of Indian Energy Exchange, no other stock in Nifty financial index trades beneath the 200-day moving average. Trading community regards the 200-DMA as the most decisive indicator to ascertain the underling momentum. 

Technical bullish formations

Nifty financial services index has productively risen following a move over its 200-DMA in April this year. The support levels at placed at Rs 19,500, followed by 19,000 and 18,500, which needs to be defended on the closing basis, as per the daily chart. 

Only a breakdown beneath 18,500 could the index fall prey to the bear sentiment. The strength indicator, Relative Strength Index (RSI) is denoting a bullish bias, with the index absorbing all the sell-off in the overbought category, as per the daily chart. 

The index is poised to rally in the direction of 20,700 – 20,900 level, delivering an upside of 5 per cent. 

Bullish stocks on chart patterns

Bajaj Finance, HDFC Life Insurance Company, and ICICI Prudential Life Insurance Company, and Muthoot Finance have “ Golden Cross”, breakout and may easily see an upside in the range of 15 per cent to 20 per cent from short-to-medium term.

Similarly, Power Finance Corporation, Axis Bank, Cholamandalam Investment and Fin Co and REC have chart structures that endure accumulation close to their support levels, leading to a gradual upside.

ICICI Lombard General Insurance Co, and SBI Life Insurance Company are trading with “Higher high, Higher Low”, formation suggesting another rally that could garner over 10 per cent each. 

source: spidersoftwareindia