LIC Housing Finance Ltd. (LICHFL) has been under the radar of investors due to its fluctuating stock performance amidst a volatile financial market. Despite strong Q3 FY25 results, technical indicators suggest bearish momentum that could potentially drive the stock below the psychological 500 mark. This report delves into detailed technical and fundamental analysis, key support and resistance levels, and the factors influencing LIC Housing Finance’s stock trajectory.
Key Financial Highlights (Q3 FY25)
- Revenue: ₹7,070.51 crore, up 3.91% YoY and 1.89% QoQ.
- Net Profit: ₹1,434.84 crore, a 22.75% YoY increase and 8.07% QoQ growth.
- Net Profit Margin: Improved to 20.29%, up 18.13% YoY.
- Stage 3 Assets: Declined to 2.75% from 4.26% YoY, reflecting better asset quality.
- Disbursements: Grew by a muted 2% YoY to ₹15,475 crore, lagging behind competitors like PNB Housing.
- Net Interest Income (NII): Fell 5% to ₹2,000 crore.
- Net Interest Margin (NIM): Slight decline to 2.70% from 3% YoY.
Technical Analysis
Trend Analysis
- Downtrend Confirmation: Both 30-minute and daily charts confirm a consistent downtrend.
- Exponential Moving Average (EMA 10): Sloping downward, indicating persistent selling pressure.
MACD Analysis
- Bearish Momentum: The MACD line is below the signal line with increasing negative histogram bars, confirming strong bearish momentum.
Support and Resistance Levels
- Immediate Support: 555-560 (currently being tested).
- Next Support Levels: 520-530. If breached, the next psychological level is 500.
- Resistance Levels: 580 (short-term resistance), 600 (major resistance).
Volume Analysis
- Increasing volume on down days suggests strong selling pressure.
- Lack of significant buying interest near support levels increases the probability of breakdowns.
Fundamental Insights
Strengths
- Improved Asset Quality: Decline in Stage 3 assets indicates better loan performance.
- Strong Profit Growth: Despite sector challenges, LIC Housing Finance reported strong profit growth.
Weaknesses
- Slower Disbursements: Growth in disbursements lags behind competitors.
- Declining NIM: A shrinking net interest margin affects overall profitability.
- Interest Rate Impact: High interest rates can reduce housing loan demand.
Market Sentiment
- Institutional Selling: FIIs and large institutions are reducing exposure to financial stocks amid global uncertainties.
- Broader Market Weakness: Weakness in financial indices like NIFTY Financial Services impacts sentiment.
Key Levels to Watch
- Critical Support: 555-560 (testing phase).
- Breakdown Level: 520-530.
- Psychological Level: 500.
- RBI Policy Impact: Any changes in interest rates could be a catalyst.
Forecast and Price Projections
Short-Term (Next 7-10 Days)
- Bearish Scenario: If 555-560 support fails, the stock could drop to 520-530.
- Extreme Bearish Case: Breaching 520 may trigger a fall towards 500.
Medium-Term (1-3 Months)
- Trend Continuation: If bearish momentum continues, a test of 480-500 is likely.
- Recovery Scenario: Reversal only if the stock sustains above 600 with strong volumes.
Trading Strategy
- For Short Sellers: Entry below 555 with a target of 520 and stop-loss at 575.
- For Long-Term Investors: Wait for stability above 600 before considering fresh entries.
Frequently Asked Questions (FAQs) About LIC Housing Finance
1. Why is LIC Housing Finance stock falling?
Due to weak disbursement growth, declining NIM, and bearish technical indicators.
2. What are the key support levels?
555-560 (current), 520-530 (next), and 500 (psychological support).
3. Can LIC Housing Finance break the 500 level?
Yes, if bearish momentum persists and key supports are breached.
4. What is the stock’s resistance level?
580 (short-term), with major resistance at 600.
5. How has LIC Housing Finance performed in Q3 FY25?
Strong profit growth (+22.75% YoY), but concerns over NIM and disbursement growth.
6. What is the impact of interest rates on LIC Housing Finance?
Higher rates reduce housing loan demand, affecting revenue.
7. Should I invest in LIC Housing Finance now?
Caution is advised. Wait for signs of trend reversal above 600.
8. How does FII activity affect the stock?
FII selling increases supply, putting downward pressure on the stock.
9. Is LIC Housing Finance fundamentally strong?
Yes, but facing short-term challenges in growth and profitability.
10. What should traders watch for?
Volume spikes, support/resistance breakouts, and macroeconomic news.
Conclusion: The Verdict
LIC Housing Finance shows strong fundamental growth with improved profits and asset quality. However, technical indicators and market sentiment signal bearish momentum. The stock is at a critical juncture, testing the 555-560 support zone. If this level breaks with strong volume, a decline towards 520-530 is likely. Sustained selling pressure could push the stock below the psychological 500 mark in the coming weeks.
Investors should exercise caution, monitor key levels, and consider broader market trends before making decisions.
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