synopsis

Despite recent weakness, the analyst sees Bajaj Auto in a long-term uptrend. A breakout above ₹9,234, confirmed by volumes, could unlock further upside.

Bajaj Auto shares fell 3% on Friday despite reporting stable fourth-quarter earnings. The street is concerned about the company's steep market share loss in the domestic market and margin pressures.

On technical charts, SEBI-registered analyst Manish Kushwaha notes that the stock has been on a long-term uptrend, consistently making higher highs and higher lows. 

After reaching a peak near ₹12,500 it underwent a significant correction, finding support near the 50% Fibonacci retracement level and rebounding to trade between the 38.2% and 0% retracement levels. 

Kushwaha highlights that its recent rebound off the trendline around ₹7,500 indicates buying interest at these levels.

Technical indicators suggest cautious optimism: the Relative Strength Index (RSI) is currently around 53, which is neutral yet slightly bullish. It is not in overbought territory, suggesting there is still potential for upside if momentum continues. 

Volume analysis reveals spikes at key lows and reversals, indicating accumulation at support levels. 

However, there hasn't been a significant surge in volume recently; therefore, a breakout above ₹9,234 would ideally need to be confirmed with increased volume, he added.

Kushwaha flags resistance at ₹8,700 and ₹9,250, with support at ₹7,500 (trendline and 50% Fibonacci) and ₹6,000 (61.8% Fibonacci).

Bajaj Auto reported a 5.9% rise in net profit to ₹2,049.3 crore for the March quarter. Revenues rose 5.8% to ₹12,148 crore. 

While its commercial vehicles business registered double digit growth, revenue from exports took a hit because of the suspension of KTM shipments given the ongoing restructuring process. 

Brokerage firm, Motilal Oswal, flagged that its market share loss in domestic motorcycles, that too in its bread and butter 125cc+ segment, remained the key concern. 

Additionally, the ramp-up of its CNG bike Freedom has been slower than expected. They maintain their ‘Neutral’ stance with target unchanged at ₹8,688.

Bajaj Auto shares are down 2% year-to-date (YTD).

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