Shriram Finance share price snaps 2-day winning run— time to accumulate?

After a brief bullish streak, Shriram Finance sees mild profit-booking; Analysts divided on near-term entry, long-term view remains optimistic.

Market Overview: Two-Day Rally Ends with Minor Dip

Shriram Finance Ltd., one of India’s leading non-banking financial companies (NBFCs), witnessed a mild pullback on Wednesday, June 4, snapping a two-day winning streak. The stock, which had gained close to 6% in the previous two sessions, closed down 1.2% at ₹2,230 per share on the NSE. The decline comes amid broader market volatility and profit-taking by short-term investors.

The NSE Nifty 50 and BSE Sensex also closed marginally lower, reflecting cautious investor sentiment as global cues remained mixed ahead of key economic data releases from the US and Europe.

Shriram Finance: Recent Momentum and Catalysts

Over the past few months, Shriram Finance has enjoyed positive momentum fueled by strong Q4 FY24 results, improved asset quality, and continued traction in loan disbursements. The company reported a net profit of ₹1,920 crore for the March 2024 quarter, up 38% year-on-year, beating street estimates.

Net Interest Income (NII) rose 18% YoY to ₹5,045 crore, while Gross Non-Performing Assets (GNPA) declined to 5.6% from 6.3% a year ago. These numbers have encouraged investor confidence, particularly in a sector where asset quality remains a key metric.

Analyst Views: Mixed Reactions on Entry Timing

While the stock’s dip has prompted some investors to look for entry opportunities, analysts remain split on whether now is the right time to accumulate.

“The fundamentals are intact, and the long-term growth story is compelling. However, valuations are not as attractive as they were six months ago,” said Ravi Menon, Senior Analyst at Motilal Oswal Financial Services. “Those with a long-term horizon can start nibbling, but I’d advise staggered buying.”

On the other hand, Meera Jaiswal, a market strategist at Axis Securities, believes there may be further downside in the short term.

“The stock has run up quite a bit over the past quarter. We might see consolidation around the ₹2,150–₹2,200 zone. A deeper correction would offer a more attractive risk-reward,” she noted.

Technical Take: Key Levels to Watch

On the technical charts, Shriram Finance shows signs of short-term exhaustion. The Relative Strength Index (RSI) has dipped below the overbought territory, currently hovering around 58. Support is seen near ₹2,180, while resistance lies around ₹2,280.

If the stock breaks below its immediate support, further declines to ₹2,100 cannot be ruled out. However, sustained buying above ₹2,280 could trigger a move toward ₹2,350 levels, technical analysts suggest.

Industry Context: NBFCs in a Favorable Cycle

The broader NBFC sector has seen renewed investor interest due to the rising demand for credit in Tier-2 and Tier-3 cities and improved borrowing conditions post-pandemic. Shriram Finance, with its deep rural reach and diversified loan book—including commercial vehicle finance, gold loans, and SME lending—stands well-positioned to capitalize on this macro trend.

Moreover, the Reserve Bank of India’s steady interest rate stance has offered a supportive environment for lenders, even though tight liquidity conditions persist in some pockets.

Investor Outlook: Accumulate or Wait?

For long-term investors, Shriram Finance continues to offer an attractive proposition given its stable financial metrics, high yield, and consistent dividend payouts. The management's focus on maintaining asset quality, digitizing customer onboarding, and scaling operations further underpins future growth potential.

However, for short-term traders, a cautious approach may be warranted as technical indicators suggest potential consolidation. Waiting for a clearer signal around the ₹2,150 level could offer a better entry point.

While Shriram Finance’s short-term winning streak has paused, the long-term fundamentals remain robust. For investors with a 2–3 year horizon, the current dip might offer a chance to accumulate gradually. However, near-term volatility and broader market cues should be watched closely before making sizable allocations.