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The BSE Financial Services index has been on a strong uptrend since April 2020. There have been instances of intermediate corrections. However, the dips have always been bought convincingly. The index had surged over 17 per cent last year. The New Year 2024 has not seen a strong start. The index is down about 3 per cent so far. It is currently at 10,136.92. However, the overall uptrend is intact, and the index is likely to extend the rally in the coming months. Here is the outlook for the index based on the charts.
Short-term view
The short-term outlook is slightly weak. Since December last year, the index had failed to get a strong follow-through rise above 10,500. After touching a high of 10, 604 in January this year, the index has come down sharply. Over the last three weeks, it is facing resistance around 10,300.
Immediate support is at 9,900-9,800. The index has been range bound between 9,800 and 10,600 for more than two months now. If it manages to sustain above 9,800, then the sideways consolidation between 9,800 and 10,600 can continue for some more time.
However, a break below 9,800 can take the BSE Financial Services index down to 9,400 in the coming months. This level of 9,400 is a very strong trendline support. As such, a break below it might not be very easy. We can expect the index to resume the overall uptrend from around 9,400. That leg of rally can take the BSE Financial Services index up to 10,300 and 10,500 again.
Graph Source: MetaStock
Long-term view
As mentioned above, 9,400 is a very strong long-term trendline support. A break below it will need some strong negative trigger. In the absence of such trigger, the overall uptrend will remain intact. As such, the fresh rally that is expected to begin from around 9,400 will have the potential to breach 10,600 decisively. Such a break will see the BSE Financial Services index targeting 12,600-12,900 by the end of this year or in the first quarter of 2025.
Stocks to watch
Within the BSE Financial Services index, the following stocks are looking very strong on the charts from a long-term perspective. Max Financial Services (₹988), ICICI Prudential Life Insurance Company (₹521) and Repco Home Finance (₹458). Long-term investors can consider buying these shares.
Please note that the above-mentioned stocks are suggested purely based on charts and technical analysis. So, long-term investors intending to buy these stocks will have to do their own due diligence. Also, proper risk management strategies have to be put in place before taking positions in these stocks.
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