L&T Finance Ltd Technical Momentum Shifts Signal Bullish Outlook

Price Movement and Market Context

The stock closed at ₹316.10 on 1 January 2026, up 3.59% from the previous close of ₹305.15. Intraday, it touched a high of ₹316.85, nearly matching its 52-week peak of ₹316.85, while the low was ₹302.55. This price action reflects robust buying interest, pushing the stock close to its annual high. Over the past week, L&T Finance Ltd outperformed the Sensex by a wide margin, delivering a 4.25% return compared to the benchmark’s marginal decline of 0.22%. The year-to-date and one-year returns stand impressively at 133.11%, dwarfing the Sensex’s 9.06% gain over the same period. Even over longer horizons, the stock has outpaced the broader market, with a three-year return of 262.50% versus Sensex’s 40.07%, and a ten-year return of 384.82% compared to 226.30% for the benchmark.

Technical Indicators: Mixed Signals but Bullish Bias

The technical landscape for L&T Finance Ltd is nuanced. The overall technical trend has upgraded from mildly bullish to bullish, reflecting improved momentum and investor sentiment. On a daily basis, moving averages are firmly bullish, indicating that short-term price action is supported by upward momentum. The stock’s price remains above key moving averages, which often act as dynamic support levels.

However, the weekly and monthly MACD (Moving Average Convergence Divergence) indicators present a mixed picture. The weekly MACD remains mildly bearish, suggesting some short-term caution, while the monthly MACD is bullish, signalling a longer-term positive trend. This divergence implies that while short-term momentum may experience minor pullbacks, the medium to long-term outlook remains constructive.

The Relative Strength Index (RSI) readings are bearish on both weekly and monthly charts, indicating that the stock may be experiencing some overbought conditions or momentum fatigue in the near term. Despite this, the bullish signals from Bollinger Bands on both weekly and monthly timeframes suggest that price volatility is expanding upwards, often a precursor to sustained rallies.

Additional Technical Measures Support Uptrend

Other momentum indicators such as the KST (Know Sure Thing) and Dow Theory also provide a layered view. The weekly KST is mildly bearish, but the monthly KST is bullish, reinforcing the notion of longer-term strength despite short-term consolidation. Dow Theory trends are bullish on both weekly and monthly scales, which is a positive confirmation of the stock’s upward trajectory.

On-Balance Volume (OBV) readings are bullish across weekly and monthly charts, indicating that volume trends support the price advances. This volume-price relationship is critical as it confirms that the recent price gains are backed by genuine buying interest rather than speculative moves.

Mojo Score Upgrade and Market Capitalisation Insights

Reflecting these technical improvements, MarketsMOJO has upgraded L&T Finance Ltd’s Mojo Grade from Sell to Hold as of 14 May 2025, with a current Mojo Score of 67.0. This score indicates a moderate level of confidence in the stock’s prospects, balancing the bullish technical signals with some cautionary momentum indicators. The company’s market cap grade remains at 2, signalling a mid-sized capitalisation within the NBFC sector, which often translates to a blend of growth potential and relative stability.

The upgrade in technical trend from mildly bullish to bullish aligns with the Mojo Grade improvement, suggesting that the stock is entering a phase where investors may consider accumulating positions, especially given its strong relative performance versus the Sensex and sector peers.

Sector and Industry Context

L&T Finance Ltd operates within the Non Banking Financial Company (NBFC) sector, a segment that has seen renewed investor interest due to improving credit conditions and regulatory clarity. The sector’s performance often correlates with broader economic cycles, and the bullish technical signals in L&T Finance Ltd may reflect optimism about credit growth and asset quality improvements in the NBFC space.

Investors should note that while the stock’s technical indicators are largely positive, the bearish RSI on weekly and monthly charts suggests that some profit-taking or consolidation could occur in the short term. This is typical in stocks that have delivered strong returns, as L&T Finance Ltd has over the past year and beyond.

Comparative Returns Highlight Strong Outperformance

When analysing returns, L&T Finance Ltd’s performance is striking. Its 1-year and year-to-date returns of 133.11% far exceed the Sensex’s 9.06% gain, underscoring the stock’s strong momentum and investor appetite. Over five years, the stock has delivered 237.53% returns, compared to the Sensex’s 78.47%, and over ten years, the outperformance is even more pronounced at 384.82% versus 226.30%. This sustained outperformance highlights the company’s ability to generate shareholder value over multiple market cycles.

Investor Takeaway and Outlook

In summary, L&T Finance Ltd’s technical parameters indicate a positive momentum shift, with the stock moving into a bullish trend supported by daily moving averages, monthly MACD, Bollinger Bands, and volume-based indicators like OBV. The mixed signals from weekly MACD and RSI suggest that investors should remain vigilant for short-term volatility or pullbacks.

Given the company’s strong relative returns compared to the Sensex and its upgraded Mojo Grade, investors with a medium to long-term horizon may find L&T Finance Ltd an attractive candidate for portfolio inclusion within the NBFC sector. However, the current overbought RSI readings warrant cautious position sizing and monitoring of momentum indicators for signs of trend exhaustion.

Overall, the technical and fundamental backdrop supports a constructive outlook, with the stock poised to benefit from favourable sector dynamics and sustained investor interest.

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