Should I Buy Bajaj Finance at 2000 Average or Wait? Understanding Support and Resistance Levels
Bajaj Finance is a fundamental powerhouse in the consumer finance industry, and it presents a compelling investment opportunity. Despite a 50% decline in its share price over the past three months, Bajaj Finance remains a strong contender in a growing market. This article explores whether it's wise to buy now at an average price of 2000, or if you should wait for further fluctuations. We will also delve into the support and resistance levels, providing a detailed analysis for informed decision-making.
Why Consider Bajaj Finance for Your Portfolio?
Bajaj Finance is a leading player in the consumer finance sector, and its market position is significant. As more individuals and businesses explore financing options, Bajaj Finance is well-positioned to capture a considerable share of the market. The company's robust financial performance, supported by a strong business model and reliable management, makes it a compelling investment option. In addition, Bajaj Finance's market capitalization stands at Rs 133,580.99 crore, highlighting its substantial size and influence within the industry.
Swimming against the tide of the COVID-19 pandemic, Bajaj Finance has demonstrated resilience. According to their latest quarterly report, for the quarter ending December 31, 2019, the company reported consolidated sales of Rs 7011.05 crore, up 10.91% from the previous quarter and a whopping 40.63% from the same period in the previous year. Net profit after tax reached Rs 1614.11 crore, indicating a strong financial performance.
Current Market Conditions and Investment Advice
Due to the unprecedented impact of the Coronavirus pandemic, the banking and Non-Banking Financial Companies (NBFCs) sectors have faced significant challenges. Bajaj Finance, while still demonstrating resilience, has not been immune to the broader market sentiments. Analysts suggest that for a more comprehensive view, one should stay updated on quarterly results and company guidance on May 19th. This period is crucial for gauging market reactions and further adjusting investment strategies.
CapitolVia Global Research Co., a top investment advisory firm in India, recommends that in the short term, potential investors should consider buying Bajaj Finance at 2000. This recommendation is based on the significantly reduced share price, offering attractive entry points. However, it's essential to monitor support and resistance levels to ensure a well-rounded investment approach.
Support and Resistance Levels
For long-term investors looking to accumulate shares at different levels, key support and resistance points are vital. The first level of support is around 1967, which represents a potential buying opportunity. A second support level at 1616 can also be utilized for gradual accumulation. Long-term investors can adopt a staggered approach, purchasing shares as the stock price fluctuates within these support zones.
Additionally, the 100 Day Moving Average (DMA) at Rs 3568 and the 200 DMA at Rs 3652 provide further context. These averages help in gauging the overall trend and potential entry or exit points. However, it's important to note that the stock price might fall below 1500 in the near term, as mentioned by financial analysts.
Investor Considerations and Next Steps
While the stock price has fallen significantly, it's crucial to align your investment strategy with your risk tolerance and investment horizon. If you are confident in the long-term prospects of Bajaj Finance, waiting for further downward pressure before making the investment could be strategic. However, diversifying your portfolio and considering other investment opportunities remains a sensible approach.
For those planning to buy at the current price of 2000, consider the historical trends and technical indicators for a more informed decision. Monitoring the 1900-1950 support level over the next few days and weeks can provide valuable insights. If this support fails, the stock might fall to lower levels, such as 1800. In such scenarios, further accumulation might be recommended.
Conclusion
The decision to buy or wait for Bajaj Finance at 2000 average involves careful consideration of support and resistance levels, market conditions, and personal investment goals. With strong fundamental indicators and a favorable market outlook, Bajaj Finance continues to hold promise for long-term investors. Stay informed and proactive in your investment strategies to capitalize on these opportunities.