Strategies to trade Bajaj Finance, Bajaj Finserv post Bajaj Housing debut

Technical chart flag caution at the Bajaj twin counters owing to formation of a 'Bearish Engulfing' candlestick pattern on the daily scale; check key support, resistance levels here

Shares of Bajaj Finance, the parent company of Bajaj Housing Finance; and the former promoter company Bajaj Finserv witnessed profit-taking on the bourses following a bumper listing the group's housing finance arm.

Bajaj Housing Finance stock debuted at Rs 150 - a solid 114 per cent premium when compared to the issue price of Rs 70 per share. The stock went on the extend the gains and was locked at set upper limit at Rs 164.99 on the BSE with trades of around 60.56 million shares, and pending buy order for nearly 4.2 million shares 

On the flip side, the Bajaj Finance was down over 3 per cent at Rs 7,350 levels, while Bajaj Finserv declined over 2 per cent to Rs 1,853. READ MORE

Now, that the Bajaj Housing Finance IPO euphoria stands to wane; what should be your trading strategy in these Bajaj twins? Here's a trading guide based on the present chart patterns.

Bajaj Finance

Current Price: Rs 7,350

Downside Risk: 5.4%

Support: Rs 7,135

Resistance: Rs 7,450; Rs 7,600

The candlestick pattern shows that Bajaj Finance stock is in the process of forming a 'Bearish Engulfing' pattern on the daily scale. A 'Bearish Engulfing' pattern is formed when the present candle's high and low completely overshadows the preceding candle. As such, this is generally considered as a bearish reversal.

That apart there is a negative crossover on the 14-day RSI (Relative Strength Index) on the daily scale. Thus, the near-term bias may remain tepid, with resistance likely around Rs 7,600 levels. Near resistance is visible at Rs 7,450. 

On the downside, the stock could seek support around its 20-DMA (Daily Moving Average) which stands at Rs 7,135; below which multiple support for the stock exists around Rs 6,950 levels. CLICK HERE FOR THE CHART

Bajaj Finserv

Current Price: Rs 1,850

Downside Risk: 10%

Support: Rs 1,855; Rs 1,778

Resistance: Rs 1,895

Bajaj Finserv too is seeing formation of a similar chart pattern on the daily scale. The stock, however, is seen holding support on the weekly chart at Rs 1,855. Break and sustained trade below the same is likely to lead the stock towards its 20-DMA at Rs 1,778.

In case of follow-up selling pressure, the stock may exert some downward pressure towards Rs 1,728 and Rs 1,665 levels. The bias at the counter is likely to remain tepid as long as the stock trades below Rs 1,895 levels. CLICK HERE FOR THE CHART