How to trade Max Financial Services stock amid these 3 key developments

Technical chart shows that MFSL stock is facing some resistance around Rs 1,140 level; while the short-term trend may turn cautious, the overall trend seems positive; check key levels here.

Shares of Max Financial Services (MFSL) have witnessed 3 key developments in recent trading days, including stake sale by the promoter company. 

On Friday, as of 10:30 AM, MFSL stock had wiped out the day's gain in line with weakness in the broader market and quoted with a loss of 0.5 per cent at Rs 1,112. The stock had hit a high of Rs 1,135 thus far in the day. In comparison, the BSE Sensex was down 0.9 per cent or 700 points at 81,500 levels.

Here are the 3 key developments that could sway the market mood at the MFSL counter.

 

Promoter firm cuts stake: On Thursday, Max Ventures Investment Holdings, a promoter entity for Max Financial Services, divested a 3.18 per cent stake in the company for a consideration of Rs 1,218 crore through an open market transaction.

The promoter company offloaded a total of 11 million equity shares at an average price of Rs 1,107.37 per share. Post the stake sale, the promoter's combined shareholding in Max Financial Services declined from 6.52 per cent to 3.34 per cent.

Shorts added in F&O: Secondly, on Thursday, MFSL saw significant addition of positions in the September futures contract, as the stock slipped 1.4 per cent. The open interest in futures contract increased by 55.9 per cent on addition of 4,078 additional contracts in a single day. The fall in stock price with a corresponding rise in open interest implies likely short buildup at the counter. 

Technical levels: On the charts, the MFSL stock is seen struggling around its super trend line resistance on the daily scale for the last three trading sessions. The super trend line is plotted at Rs 1,140. Thus, the near-term bias at the counter is likely to remain tepid as long as the stock fails to conquer this hurdle. CLICK HERE FOR THE CHART

The weekly chart too shows presence of some resistance around Rs 1,130; whereas resistance as per the monthly chart stands at Rs 1,190.

On the other hand, the stock could potentially slip back towards its 20-DMA (Daily Moving Average) support at Rs 1,070 levels; below which next support stands in the form of 50-DMA at Rs 1,055. The medium-term chart suggests that the overall bias at the counter is likely to remain positive as long as the stock holds above Rs 1,018 and Rs 980 support zone.