Why is Jhaveri Credits falling/rising?

Recent Price Movement and Market Context

Jhaveri Credits opened the trading session with a gap down of 4.56%, signalling immediate selling pressure from the outset. The stock’s intraday low matched its closing price of ₹202, indicating sustained weakness throughout the day. This decline contrasts with the broader market, where the Sensex showed a modest gain of 0.13% over the past week, underscoring the stock’s underperformance relative to the benchmark.

Over the last week, Jhaveri Credits had outperformed the Sensex significantly, posting an 8.78% gain compared to the benchmark’s 0.13%. However, this recent fall interrupts that positive momentum, suggesting profit-taking by investors who may be locking in gains after the rally. The stock’s one-month return remains positive at 1.69%, slightly ahead of the Sensex’s 0.77%, but the year-to-date and one-year figures reveal a contrasting picture with declines of 25.17% and 33.76% respectively, compared to the Sensex’s gains of 9.05% and 3.75% over the same periods.

Technical Indicators and Trading Activity

The stock’s technical profile shows it trading above its 5-day, 20-day, and 50-day moving averages, which typically signals short- to medium-term strength. However, it remains below its 100-day and 200-day moving averages, indicating that longer-term momentum has yet to fully recover. This mixed technical picture may contribute to the cautious stance among traders.

Investor participation has been rising, with delivery volume on 12 Dec reaching 5,840 shares, an increase of 8.83% compared to the five-day average. This heightened activity suggests that while some investors are selling to realise profits, others may be accumulating shares at lower levels, anticipating a potential rebound.

Liquidity remains adequate, with the stock’s traded value supporting sizeable trade sizes, which facilitates smoother price discovery and reduces volatility caused by thin trading.

Long-Term Performance and Investor Sentiment

Despite the recent setback, Jhaveri Credits has delivered extraordinary returns over the longer term. The stock has surged by over 1,600% in three years and an astonishing 9,295% in five years, vastly outperforming the Sensex’s respective gains of 37.89% and 84.19%. This remarkable growth trajectory reflects the company’s strong fundamentals and investor confidence in its business model.

However, the significant year-to-date and one-year declines highlight the volatility and challenges faced in the shorter term, possibly due to sector-specific headwinds or broader market corrections affecting NBFC stocks. The current price correction may be a natural consolidation phase following an extended rally.

Conclusion: Profit-Taking and Market Dynamics Drive the Decline

The fall in Jhaveri Credits’ share price on 15-Dec can be primarily attributed to profit-taking after a sustained rally, as investors capitalise on recent gains. The gap down opening and the stock’s underperformance relative to its sector by 5.29% today reinforce this view. While technical indicators show mixed signals, rising delivery volumes suggest that some investors remain optimistic about the stock’s prospects.

Given the company’s impressive long-term returns and recent positive momentum, this correction may offer a buying opportunity for investors with a longer horizon. However, the stock’s year-to-date and one-year underperformance compared to the Sensex indicate that caution is warranted amid ongoing market uncertainties.

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