IIFL Finance (W): Strongly Bullish - Turnaround BreakoutTimeframe: Weekly | Scale: Logarithmic
The stock has confirmed a decisive breakout from a multi-year consolidation phase. This move marks the end of the post-embargo correction and is supported by strong fundamental catalysts and technical alignment.
🚀 1. The Fundamental Catalyst (The "Why")
The breakout is driven by a powerful business turnaround:
- Gold Loan Normalization: The biggest overhang on the stock was the RBI embargo on gold loans. With this fully lifted, the business has normalized, as seen in the recent Q2 FY26 Earnings where Net Profit surged 148% (YoY).
- NCD Issuance: The recent board approval to raise ₹2,000 Crore via NCDs signals confidence in growth and liquidity, acting as an immediate trigger for the stock price.
- Fitch Upgrade: Fitch Ratings recently revised the outlook to "Positive," adding institutional confidence.
📈 2. The Long-Term Structure (The "Box" Breakout)
> The Cycle:
- Peak: ATH of ₹683 in Oct 2023.
- Correction: A steep fall to the ₹294–₹304 support zone (March 2024 lows), effectively forming a "double bottom" base.
> The Breakout: The ₹535 – ₹540 zone has acted as a stiff resistance since early 2024.
- The Move: This week, the stock decisively broke and closed above this resistance (closing near ₹578).
- The Re-test: The stock consolidated just below this level before launching higher, which is a sign of strength.
📊 3. Volume & Indicators
- Volume Clarification: Volume has been "decreasing", this is actually a good sign during the consolidation (sideways) phase, as it shows selling pressure was drying up. However, for a valid breakout, we want to see volume expand . Recent daily data shows volume spikes (e.g., 3M+ shares), confirming buyers are returning.
- EMAs: The PCO (Positive Crossover) state across Monthly, Weekly, and Daily timeframes confirms that the trend has synchronized to the upside.
- RSI: Rising across all timeframes, indicating expanding momentum.
🎯 4. Future Scenarios & Key Levels
With the "lid" at ₹540 removed, the stock has room to run toward previous highs.
> 🐂 Bullish Targets:
- Target 1: ₹683 (The ATH). This is the immediate structural target.
- Target 2: ₹950 . If the momentum sustains and the stock enters "blue sky" discovery, Fibonacci extensions project a move toward ₹950 in the long term.
> 🛡️ Support (The "Must Hold"):
- Immediate Support: ₹535 – ₹540. The breakout zone has now flipped to support. Any pullback to this level is a high-probability buying opportunity.
- Stop Loss: A close below ₹465 would invalidate the bullish thesis, as it would mean the stock has fallen back deep into the old range.
Conclusion
This is a Grade A Turnaround Setup . The lifting of regulatory clouds (Gold Loan ban) combined with a technical breakout above ₹540 makes this a high-conviction trade. Watch for stability above ₹535 .
