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About the company:

Mahindra and Mahindra (NS:MAHM) Financial Services Ltd (NS:MMFS) provides financing for new and pre-owned auto and utility vehicles, tractors, cars, and commercial vehicles. It also provides housing finance, personal loans, small and medium enterprises funding, insurance broking, and mutual fund distribution services. The stock is trading at an 18% discount to its 52-week high level. The 52-week range is Rs 224 – Rs 118.

Technical observations:

One week time frame: (Chart 1)

On a weekly time frame, M&M Financial Services stock has formed a Rounding Bottom shape after taking support at Rs 144 level. The stock is now trading above the 50-day EMA line and is testing a critical resistance range of Rs 185 – Rs 191. We expect the stock to continue the upward movement aided by above-average volume. Relative Strength Index (or RSI) is above 60, and the Moving Average Convergence Divergence (or MACD) line has crossed the signal line from below. It shows positive momentum on the scrip. Long-term investors can enter at current levels. They should maintain the stop loss at Rs 144 (previous swing low) on a weekly closing basis.

One day time frame: (Fig 2)

On a daily time frame, from the below chart, you should observe that the stock has formed a made a Bullish Pennant formation. The share crossed a critical resistance level of Rs 175 on September 17, 2021, made a high of Rs 187.70, and then pulled back. Today, the share seems to have taken able support at Rs 175 level and bounced back. RSI is above 65, indicating a continuation of positive momentum on the scrip. Positional traders should enter only when the share has crossed the neckline of Rs 185 and sustained above it. We expect the upward movement supported by increasing volumes. You should maintain a stop loss at Rs 174 on a daily closing basis.

Conclusion:

We expect the share to maintain positive bias and move higher going ahead. Short-term traders should take a position only when the stock sustains above the Rs 185 level and keep a strict stop loss of Rs 176 on a daily closing basis.