Bajaj Finserv Ltd Forms Death Cross, Signalling Potential Bearish Trend

Understanding the Death Cross and Its Implications

The Death Cross is widely regarded by technical analysts as a warning sign of a possible prolonged downtrend. It occurs when the short-term 50-DMA, which reflects recent price action, dips below the longer-term 200-DMA, indicating that recent selling pressure is overwhelming longer-term buying interest. For Bajaj Finserv Ltd, this crossover highlights a shift in investor sentiment and a potential weakening of the stock’s price momentum.

Historically, the Death Cross has been associated with increased volatility and downside risk, often preceding periods of sustained price declines. While it is not a guaranteed predictor of future performance, it serves as a cautionary signal for investors to reassess their positions and risk exposure.

Current Market and Technical Context

Bajaj Finserv Ltd, a large-cap holding company with a market capitalisation of ₹3,23,709 crores, currently trades at a price-to-earnings (P/E) ratio of 32.02, notably higher than the industry average of 21.76. This premium valuation reflects elevated expectations but also increases vulnerability to market corrections.

Despite a strong long-term track record, with a 10-year return of 970.37% compared to the Sensex’s 245.70%, recent performance indicators suggest a more cautious outlook. The stock’s year-to-date return stands at -1.26%, slightly outperforming the Sensex’s -1.74%, but the 3-month return of -3.31% lags behind the benchmark’s -0.29%, signalling emerging weakness.

On the daily front, the stock recorded a robust 4.29% gain on 3 Feb 2026, outperforming the Sensex’s 2.54% rise, yet this short-term strength contrasts with the broader technical deterioration indicated by the Death Cross.

Technical Indicators Confirm Bearish Momentum

Further technical analysis corroborates the bearish outlook. The daily moving averages have turned negative, reinforcing the Death Cross signal. The weekly Moving Average Convergence Divergence (MACD) indicator is bearish, while the monthly MACD is mildly bearish, indicating that momentum is weakening across multiple timeframes.

The Relative Strength Index (RSI) on both weekly and monthly charts currently shows no clear signal, suggesting the stock is neither oversold nor overbought, but this neutral stance does not negate the downward pressure implied by other indicators.

Bollinger Bands present a mixed picture: mildly bearish on the weekly chart but bullish on the monthly, reflecting some underlying volatility and potential for short-term rebounds amid a longer-term downtrend.

The Know Sure Thing (KST) indicator is bearish on the weekly timeframe but bullish monthly, again highlighting the divergence between short-term weakness and longer-term resilience.

Dow Theory assessments are mildly bearish on both weekly and monthly scales, signalling that the broader market trend may be unfavourable for Bajaj Finserv Ltd in the near term.

Interestingly, On-Balance Volume (OBV) remains bullish on both weekly and monthly charts, indicating that despite price weakness, accumulation by investors is still occurring, which could provide some support against further declines.

Fundamental and Market Grade Assessment

MarketsMOJO’s latest evaluation downgraded Bajaj Finserv Ltd from a Hold to a Sell rating as of 1 Feb 2026, reflecting the deteriorating technical and fundamental outlook. The company’s Mojo Score stands at 47.0, placing it in the Sell category, signalling caution for investors.

The Market Cap Grade is rated at 1, indicating that despite its large-cap status, the stock currently lacks the quality metrics favoured by institutional investors. This downgrade aligns with the technical signals and recent price underperformance relative to the Sensex.

Investors should note that while Bajaj Finserv Ltd has outperformed the Sensex over longer horizons—50.51% over three years and 111.20% over five years—the recent trend deterioration and Death Cross formation suggest that the stock may face headwinds in the short to medium term.

Investor Takeaways and Outlook

For investors holding Bajaj Finserv Ltd, the Death Cross formation is a clear signal to reassess portfolio exposure. While the stock’s long-term fundamentals and historical performance remain strong, the current technical deterioration suggests caution is warranted.

Short-term traders may interpret this as an opportunity to reduce positions or hedge against potential downside, while long-term investors should monitor the stock closely for confirmation of trend reversal or signs of recovery.

Given the mixed signals from volume-based indicators and monthly bullishness in some oscillators, a rebound cannot be ruled out. However, the prevailing consensus points to a period of consolidation or decline before any sustained uptrend can resume.

In summary, the Death Cross in Bajaj Finserv Ltd’s chart marks a pivotal moment, highlighting the risk of a bearish phase. Investors should balance this technical warning with fundamental analysis and broader market conditions before making decisions.

Summary of Key Metrics:

• Market Cap: ₹3,23,709 crores (Large Cap)
• P/E Ratio: 32.02 vs Industry P/E 21.76
• Mojo Score: 47.0 (Sell), downgraded from Hold on 1 Feb 2026
• 1 Year Return: 12.18% vs Sensex 8.49%
• 3 Month Return: -3.31% vs Sensex -0.29%
• 10 Year Return: 970.37% vs Sensex 245.70%
• Daily Change (3 Feb 2026): +4.29% vs Sensex +2.54%
• Technical Indicators: Daily Moving Averages Bearish, Weekly MACD Bearish, Monthly MACD Mildly Bearish

Investors should remain vigilant as the Death Cross often precedes periods of increased volatility and potential price declines. Monitoring subsequent price action and volume trends will be critical in determining whether Bajaj Finserv Ltd can stabilise or if further downside is imminent.

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