India shares analysis: Mazagon Dock, ICICI Bank, Bajaj Finserv
Indian stocks are doing well this year, helped by the rising hopes that the Reserve Bank of India (RBI) and the Federal Reserve will start cutting interest rates in the near term. They have also soared because of the weaker Indian rupee (INR), which has made it more attractive for the country’s top exporters.
Most importantly, they have rose as the Indian economy continues to fire on all cylinders. Inflation, while stubbornly high, has started falling. The unemployment rate has retreated while analysts expect that the economy will grow by over 7% this year. The Nifty 50 index has jumped by 16% this year while the BSE Sensex has soared by 14%.
This price action is in line with what has happened in other countries. In the United States, the S&P 500 and Nasdaq 100 indices have soared by over 17% while in Europe, top indices like the CAC 40 and DAX have risen to their record highs. This report looks at three popular Indian stocks like Mazagon Dock, ICICI Bank, and Bajaj Finserv.
Mazagon Dock
Mazagon Dock, India’s biggest shipbuilding company, has done well in the past few years, helped by the rising demand by the government. Its revenue has jumped from over ₹4,897 crore in 2020 to over ₹9,466 crore in the last financial year. Its annual profits have also moved from ₹758 crore to over ₹2,461 and the management believes that the trend will continue.
Mazagon Dock’s margins have also improved, with the operating margin moving from 15% to 26% despite the inflationary pressures.
This performance is reflected in the stock’s performance as the Mazagon Dock’s shares have more than doubled this year. It has risen by over 159% from its lowest point in 2023, outperforming other global shipbuilding companies like Samsung Heavy, Mitsubishi Heavy, and and Daewoo.
Turning to the daily chart, we see that the Mazagon Dock’s share price peaked at ₹5,855 earlier this year. Most recently, it has moved to a bear market, falling by over 20% from its highest point this year.
The stock has also formed a descending channel, which has some resemblance to a falling wedge. In most cases, this pattern is often a bullish sign. It has remained above the 50-day and 100-day Exponential Moving Averages (EMA). Therefore, the stock will likely bounce back as investors target the key resistance point at ₹5,000.
ICICI Bank
ICICI, one of the biggest banks in India, has done well this year, outperforming the likes of HDFC and Axis Bank.
Its stock has risen by over 24% this year, while the Nifty Bank index has risen by less than 10%. This performance happened after the company published strong financial results, which showed that its profits rose by 11.8% to ₹14,980 crore or $1.4 billion.
Profit after tax rose by 14.6% while deposits rose by 14.1% to over $171 billion. This is notable since most Indian banks are seeing weak deposit growth as customers move to money market funds.
Turning to the daily chart, we note that the ICICI Bank stock price has moved sideways recently. It has stalled at ₹1,240, a few points below the key resistance point at ₹1,246. The stock has formed a double-top chart pattern, a popular bearish sign.
Therefore, there is a risk that the stock will retreat in the coming days unless bulls cross the resistance level at ₹1,247 and invalidate the double-top pattern.
Bajaj Finserv
Bajaj Finserv share price has continued to do well this year. Most of these gains started in July when the company released mixed financial results.
On the positive side, its assets under management rose by 31% to over $42.6 billion. Its loans booked rose by 10% while the number of customers rose to 88.1 million. This performance makes Bajaj Finserv one of the biggest non-bank financial services companies in India.
While the company has benefited from high interest rates, wit its net interest income rising by 25%, there are signs that defaults are rising.
The Bajaj Finserv stock has soared to a high of ₹1,876. Most recently, it crossed the important resistance point at ₹1,740, the previous all-time high. It has also formed a golden cross pattern as the 200-day and 50-day moving averages have crossed each other.
However, there are signs that the stock has become highly overbought as the Relative Strength Index (RSI) has moved to the extreme overbought point at 80 while the Stochastic Oscillator has moved to over 93.
Therefore, while the long-term outlook for the stock is bullish, there are signs that it will have a short-term reversal as some investors start to take profits. If this happens, the next point to watch will be at ₹1,740.
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