Why is Explicit Finance Ltd falling/rising?

Strong Year-to-Date and Long-Term Performance

Explicit Finance Ltd has delivered exceptional returns over the year, with a year-to-date gain of 75.24%, significantly outperforming the Sensex benchmark, which recorded an 8.39% increase over the same period. This remarkable growth is further underscored by the stock’s one-year return of 73.31%, dwarfing the Sensex’s 7.62% rise. Over a longer horizon, the company’s shares have appreciated by 181.57% over three years and an impressive 673.46% over five years, compared to the Sensex’s 38.54% and 77.88% gains respectively. These figures highlight Explicit Finance’s sustained outperformance and strong investor confidence in its business model and growth prospects.

Recent Price Movement and Market Dynamics

Despite a slight pullback in the short term, with the stock declining 3.84% over the past week and 5.72% over the last month, the recent price action on 29-Dec indicates renewed buying interest. The stock outperformed its sector by 5.32% on the day, signalling relative strength amid sectoral pressures. Notably, Explicit Finance has been on a positive trajectory for two consecutive days, delivering a combined return of 6.46% during this period. This short-term momentum suggests that investors are regaining confidence, possibly anticipating further gains or reacting to underlying fundamentals.

Technical Indicators and Investor Participation

From a technical standpoint, the stock’s current price sits above its 50-day, 100-day, and 200-day moving averages, which typically indicates a bullish trend over the medium to long term. However, it remains below the 5-day and 20-day moving averages, reflecting some recent short-term volatility or consolidation. Importantly, investor participation has surged, with delivery volume on 26-Dec reaching 1.64 lakh shares, marking a 315.82% increase compared to the five-day average delivery volume. This spike in delivery volume is a strong indicator of genuine buying interest rather than speculative trading, reinforcing the positive price movement observed.

Liquidity and Trading Conditions

Liquidity remains adequate for trading, with the stock’s traded value supporting sizeable trade sizes without significant price impact. This ensures that investors can enter or exit positions with relative ease, which is a favourable condition for sustained price appreciation. The combination of strong liquidity and rising investor participation often acts as a catalyst for further price gains.

Balancing Short-Term Volatility with Long-Term Strength

While the stock has experienced some short-term declines relative to the benchmark indices, its overall trajectory remains strongly positive. The recent price rise on 29-Dec can be attributed to a combination of factors including the stock’s impressive long-term returns, technical support from moving averages, and a surge in delivery volumes signalling increased investor conviction. These elements collectively suggest that the market is recognising the company’s growth potential and rewarding it accordingly.

Conclusion

Explicit Finance Ltd’s share price rise on 29-Dec is a reflection of its strong year-to-date and long-term performance, coupled with increased investor participation and favourable technical indicators. Despite some short-term volatility, the stock’s ability to outperform its sector and benchmark indices highlights its resilience and appeal to investors. Market participants appear to be responding positively to these factors, driving the stock higher and signalling confidence in the company’s future prospects.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →