Down Fintech Rally 10%, Signs ‘Bottom Reversal’!
The financial space has played a key role in supporting the broader market rally over the past couple of months. Many of these stocks have already made a move and are trading near their highs, making the risk-to-reward ratio slightly unfavorable. But there is one counter in the fintech space that has yet to impress investors and has started its reversal from today.
PB Fintech Ltd (NS:), popularly known by Policy Bazar, has a market capitalization of INR 22,456 crores and offers an online platform for insurance and lending products by harnessing the power of technology, data and innovation.
Policy Bazar has grown its revenue at a tremendous pace and achieved a revenue of INR 1,550.28 crores in FY22, showing a growth of 61.92% over the previous year. Surprisingly, the company has delivered even higher growth in revenue, with a massive annual rate of 63.48% over the past five years. Such high growth over a 5-year period is nothing short of commendable. However, the company is struggling to achieve profitability and losses rose from INR 150.25 crores in FY21 to INR 832.91 crores in FY22.
Image description: Weekly chart of PB Fintech showing a trend line
Image source: Investing.com
However, the stock today shows that all the negativity and pessimism is probably discounted in the price. The share price of Policy Bazar witnessed a surge in demand, leading it to rise 10.4% to last trade price of INR 557.4 by 14:28 IST. The rally is seen near all-time lows for the stock, which could make it a good value proposition for investors who have missed the rally in the financial space.
Not only the price gain, another interesting thing visible on the chart is the breakout above the falling trend line. Since its IPO last November, the stock has only made lower lows and lower highs, which has also formed trendline resistance on the weekly chart. Today, this resistance has been broken with good buying support. The volume for the day was around 3.54 million shares so far, which is not very high, but definitely better than the average volume.
This trend line break is the signal of a confirmed trend reversal, until the stock breaks its all-time low. Since the stock has fallen quite a bit from its listing price of INR 1150, the upside potential looks good against the backdrop of being heavily oversold. The nearest resistance around INR 600 would be the immediate hurdle for the stock, above which a level of INR 700 seems to have no supply zone in between.
