- Higher‑high, higher‑low formation confirms a sustained uptrend.
- Shares have climbed 89% YoY and 336% over five years.
- EMA stack (20‑, 50‑, 100‑, 200‑day) all sloping upward, indicating strong momentum.
- RSI at 66.9 shows vigor without being overbought.
- Target range ₹1,110‑₹1,165 with dip buying opportunities near ₹980.
You missed the early rally; now the next leg could be the most rewarding.
Why Shriram Finance's Chart Pattern Signals a Bullish Run
Technical analysts obsess over the higher‑high, higher‑low (HH‑HL) pattern because it visualizes buyer dominance across multiple sessions. Shriram Finance has drawn a clean HH‑HL line on the daily chart, meaning each rally tops the previous high and each pull‑back respects a higher low. This geometry is a classic continuation signal—historically, assets that maintain this shape for more than a month tend to break out higher.
The stock also respects its 20‑day exponential moving average (EMA) around ₹980, a dynamic support level that moves with price. When price stayed above this EMA for several weeks, it demonstrated that short‑term traders were consistently buying on dips, a sign of accumulation. The EMA stack—20, 50, 100, and 200 days—all sit in an ascending corridor, reinforcing a multi‑timeframe bullish bias.
NBFC Sector Tailwinds Amplify Shriram's Upside
Non‑Bank Financial Companies (NBFCs) are benefitting from a credit‑friendly policy environment, rising consumption, and a widening financial inclusion gap. The Reserve Bank's recent easing of capital adequacy norms for tier‑II NBFCs has lowered funding costs, allowing lenders like Shriram to expand loan books while preserving margins.
Furthermore, the Indian middle class is expected to grow by 150 million by 2027, driving demand for unsecured personal loans, vehicle financing, and SME credit—all core segments for Shriram Finance. The sector’s aggregate loan growth rate of 12‑14% YoY outpaces the broader banking sector, providing a tailwind that can lift top‑line earnings.
How Competitors Like Bajaj Finance Are Positioned
Peer comparison is essential. Bajaj Finance, the sector heavyweight, has posted a 30% YoY earnings surge but trades at a premium EV/EBITDA multiple of 20x versus Shriram’s 13x, reflecting higher valuation pressure. Mahindra Finance, another peer, has delivered a 45% share price appreciation this year but suffers from a higher credit‑risk profile due to deeper exposure to auto loans.
In contrast, Shriram’s asset‑liability management shows a lower non‑performing asset (NPA) ratio of 1.2% versus the industry average of 2.0%. This lower risk metric gives Shriram a cushion to reinvest earnings into higher‑yielding loan products without compromising balance‑sheet health.
Historical Bull Runs in Indian NBFCs
Looking back, HDFC Ltd.’s NBFC arm experienced a similar HH‑HL breakout in 2017, rallying 78% in 18 months before its stock became a benchmark performer. The pattern repeated with Cholamandalam Investment and Finance in 2019, delivering a 92% gain after a clean higher‑high formation. These precedents suggest that disciplined technical signals, coupled with sector fundamentals, often precede multi‑year outperformance.
Technical Indicators Decoded: EMA, RSI, and What They Mean for You
Exponential Moving Average (EMA) places greater weight on recent prices, making it more responsive than a simple moving average. When price stays above a rising EMA, it indicates that recent buying pressure is outpacing selling pressure.
Relative Strength Index (RSI) measures the speed and change of price movements on a 0‑100 scale. An RSI between 55 and 70 typically signals strong momentum without being overbought. Shriram’s RSI at 66.9 falls squarely in this sweet spot, suggesting the stock still has room to climb.
Investor Playbook: Entry, Targets, and Risk Management
Bull Case: Enter near the current price of ₹1,007 or on a pull‑back to the 20‑day EMA around ₹980. Aim for the first target of ₹1,110, which aligns with the recent high‑trend line. If momentum persists, push the upside to ₹1,165, roughly 15% above the initial target.
Bear Case: A breach below the 20‑day EMA with volume spikes could signal a short‑term correction. Set a stop‑loss around ₹945, the next significant support level observed on the 50‑day EMA. A drop below this could indicate the trend is weakening, prompting a reassessment.
Position Sizing: Allocate no more than 5‑7% of a diversified equity portfolio to Shriram Finance, given its concentration in the NBFC space. Use a staggered entry strategy: buy a core position at ₹1,007, add on dips at ₹980, and consider a smaller add‑on at ₹945 if the broader market remains supportive.
In summary, Shriram Finance blends a technically robust chart, sector tailwinds, and a disciplined risk profile. For investors hunting high‑conviction, medium‑term catalysts, the stock’s current formation offers a compelling entry point ahead of a potential multi‑month rally.