Bajaj Finance to complete wave (c) decline in five waves
A quick recap for those not familiar with Elliott Waves. Index / Stock rises in five waves of major trend (up or down) and correct in three waves in opposite direction (down or up). The power of Elliott waves is that it's a fractal, so this happens at all time frames starting from Month/ week all the way down to hourly and even 5-min chart.
The last major low for most stocks including Bajaj Finance is Mar'20 pandemic low, when NIFTY fell by as much as 40% within six weeks, the sharpest ever fall in Indian stock market history. Starting from the March '20 low, on the daily chart, Bajaj Finance had completed wave (3) when it hit the peak of INR 5822 on 16-Feb. (Not shown here as this is only an hourly chart). Bear in mind that wave (3) is the strongest wave, so the best of bull market in Bajaj Finance is behind us now. That said, don't lose heart. Wave (5) is still left and I expect it to be stronger and take the stock higher, though we are not there as yet. The pandemic
is raging insanely and causing devastation in our nation, the last thing you expect is a strong bull wave. Though markets are known to be insane, not that insane thankfully and hopefully.
Back to the present, Bajaj Finance is correcting in Wave (4) since Feb 16th and has completed waves (a) and waves (b) of the three wave a-b-c correction. The wave (c) correction has commenced and the stock will drop steeply in coming days. Buying a put option expiring on 27-May is a viable option.
Alternate scenario: You can never be 100% sure in foresight, so its' always wiser to look at an alternate scenario. The alternate scenario would be that Bajaj Finance already completed correction in wave (4) when it hit the bottom on 19-Apr @4362. In that case, the stock is now on wave (1) of wave (5) bull wave. As you can see from the wave counts after 19-Apr, which I have marked, Bajaj has already completed five waves up, meaning it has completed sub-wave (1) of wave (5). This will be now followed by wave (2), which will at least correct the rise in wave (1) from Apr 19th till 4-May peak of 5749 by at least 50%, if not 61.8%.
Whichever scenario plays out, it's safe to assume the next move for the stock in the coming days is way down.
The last major low for most stocks including Bajaj Finance is Mar'20 pandemic low, when NIFTY fell by as much as 40% within six weeks, the sharpest ever fall in Indian stock market history. Starting from the March '20 low, on the daily chart, Bajaj Finance had completed wave (3) when it hit the peak of INR 5822 on 16-Feb. (Not shown here as this is only an hourly chart). Bear in mind that wave (3) is the strongest wave, so the best of bull market in Bajaj Finance is behind us now. That said, don't lose heart. Wave (5) is still left and I expect it to be stronger and take the stock higher, though we are not there as yet. The pandemic
is raging insanely and causing devastation in our nation, the last thing you expect is a strong bull wave. Though markets are known to be insane, not that insane thankfully and hopefully.
Back to the present, Bajaj Finance is correcting in Wave (4) since Feb 16th and has completed waves (a) and waves (b) of the three wave a-b-c correction. The wave (c) correction has commenced and the stock will drop steeply in coming days. Buying a put option expiring on 27-May is a viable option.
Alternate scenario: You can never be 100% sure in foresight, so its' always wiser to look at an alternate scenario. The alternate scenario would be that Bajaj Finance already completed correction in wave (4) when it hit the bottom on 19-Apr @4362. In that case, the stock is now on wave (1) of wave (5) bull wave. As you can see from the wave counts after 19-Apr, which I have marked, Bajaj has already completed five waves up, meaning it has completed sub-wave (1) of wave (5). This will be now followed by wave (2), which will at least correct the rise in wave (1) from Apr 19th till 4-May peak of 5749 by at least 50%, if not 61.8%.
Whichever scenario plays out, it's safe to assume the next move for the stock in the coming days is way down.
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