Top/Down Take: Bajaj Finance (BAJFINANCE)

First let’s take a look at the broader market. Our universe of Nifty500. As we can see, the index is making new highs and is in a strong uptrend. With the RSI staying put in the overbought zone, the bullish momentum continues to play out. The 200-DMA sloping upwards suggests the continuation of this positive trend.

Now let's take a look at what Nifty Financial Services is doing. This week, it has clocked a new all-time high, moving higher in the overbought region indicating the inherent strength in the index. The next level to watch out for in this index is 17,050.

On a relative basis too, when we look at the Financial Services sector chart relative to Nifty 100, Financial Services have taken support from a crucial level and seem to be headed higher for another leg of rally. With the 200DMA moving higher, and the RSI holding on to higher levels, we may see a good move going forward.

Let’s move straight ahead to Bajaj Finance. This stock has been in a secular bull trend and has always managed to recover ground quickly after every correction. The same seems to have repeated this time as well. Trading at all-time highs, the price broke above its 2020 resistance with a strong bullish weekly candle, as the RSI continued to gain strength and momentum.

We are positive in Bajaj Finance above 4750, for a target of 6520. Although the stock has run up quite a bit, there is strength in the counter and sector that could take the price higher.

The stock has been performing extremely well on a relative basis too when we look at it compared to the Financial Services Index. While momentum did drop a little, RSI is making higher high with the most recent price move and continues to display strength.

The final step is to look at the stock relative to Nifty50. As can be seen, the stock is outperforming the index and is moving higher with the RSI placed in the overbought territory.

Financial services constituents have been consistent performers over the past few months. With the market extending its rally and the sectoral index making a new high, we think that the bullish momentum is still place. In the current set-up our risk management level is 4750, with a target of 6520.

While the reward/risk ratio may not suit everyone with Bajaj Finance trading at all-time highs, we believe that with careful planning and execution, a good move can be caught with the right amount of discipline.

We'll be talking about this sector and more in next week's Members-Only Conference Call.

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Thanks for reading and please let us know if you have any questions!

Allstarcharts Team