Shriram Finance – Potential Breakout or False Alarm?
Technical Overview 📈
✅ Uptrend intact – The stock has been taking support at a long-term trendline and briefly fell out during the correction. Now, it has reclaimed the trendline.
✅ Breakout from a Cup & Handle pattern – A bullish pattern indicating possible upside.
✅ Volume picking up – Still needs more confirmation for strength.
✅ Golden Crossover possible – If recent lows hold, further upside can trigger a 50 & 200 DMA crossover.
✅ Sector strength – The finance sector index is trading above key DMAs, showing resilience.
Fundamental Snapshot 💰
Revenue Growth: 📈 Increasing YoY
EPS Growth: 📈 Improving
Profit Growth: 🚀 23.4% CAGR over the last 5 years
Healthy Dividend Payout: 21.6%
Market Cap: ₹1,26,653 Cr
Stock P/E: 15.6
Book Value: ₹279
Dividend Yield: 1.34%
ROCE: 11.3% | ROE: 15.9%
Face Value: ₹2
⚠️ Risk Factors:
Low Interest Coverage Ratio
Market Volatility – Could still be forming Lower Highs - Lower Lows (LL-LH) structure.
Volume Needs to Improve for stronger confirmation.
(Source: Screener.in)
Risk-Reward Calculation 🎯
1️⃣ Early Entry (₹695.1)
Stop Loss (SL): ₹607 (-12.65%)
Target: ₹890.8 (+28.12%)
Risk-to-Reward (R:R) = 1:2.22 ✅
2️⃣ Safe Entry (₹732.35)
Stop Loss (SL): ₹607 (-17.08%)
Target: ₹890.8 (+21.7%)
Risk-to-Reward (R:R) = 1:1.27 ✅
💡 Conclusion:
Early Entry (1:2.22) offers a better reward potential but has a higher risk of pullback.
Safe Entry (1:1.27) is more conservative but offers a lower reward.
Conclusion & Trading Plan 🎯
🔹 No need to rush in! Gradual accumulation is a wiser approach at this stage.
🔹 Risk Management is Key! This could be a false breakout or a pullback trap. Wait for confirmation.
🔹 Volume confirmation is essential – Without strong volume, the move might fail.
📢 Educational Idea | Not a Trade Recommendation 📢
This setup is shared to alert traders of a potential winner once the market settles. Not all setups play out, and only 5-6 out of 10 might succeed. Hence, risk management and position sizing are key. 📉📊
📢 Disclaimer: This post is for educational purposes only. It is NOT financial advice. All trades carry risk, and market conditions can change. Do your own research and manage risk accordingly.
