Shriram Finance Limited
Shriram Finance Limited is one
of India’s leading retail NBFCs, focused on serving the unbanked and
underbanked segments through a strong pan-India network covering rural,
semi-urban and urban markets.
The company reported a strong
Q1 FY2027, with consolidated net profit rising 59.89% YoY to ₹3,452.77 crore,
while revenue from operations increased 16.16% to ₹13,400.43 crore.
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| Figure 1 |
With the fundamentals showing healthy growth, let us now examine the Elliott Wave structure of Shriram Finance to identify its possible future price path.
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| Figure 2 |
The monthly chart shows the early price movement following the IPO. For clarity, I have isolated this portion of the chart rather than displaying the entire historical price movement.
The initial advance appears to
have formed a Leading Diagonal, completing Wave 1, followed by a corrective Wave
2. This provides the initial Elliott Wave framework for the larger structure
developing in Shriram Finance.
The subsequent price movement
and the development of the larger wave structure are examined in the next
chart.
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| Figure 3 |
In
the larger picture, we can now examine Wave 3 in greater detail. The internal
sub-waves of Wave 3 are clearly identifiable, with Sub-wave (3) extending to
the 200% Fibonacci level before completing.
However,
the fifth sub-wave of Wave 3 still needs to be analysed carefully to determine
whether the complete Wave 3 structure has already finished. Only after Sub-wave
(5) is confirmed as complete can the larger Wave 3 be considered complete.
For
now, the chart highlights the internal wave structure of Wave 3. In the next
step, we will analyse Sub-wave (5) in detail to determine whether the larger
Wave 3 has reached its completion.
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| Figure 4 |
To analyse the fifth sub-wave
in greater detail, I have moved to the weekly timeframe to examine its internal
structure. The lower-timeframe analysis shows that the minor waves within this
fifth sub-wave are clearly developing, and notably, Minor Wave 3 has extended
to the 238.2% Fibonacci extension level.
However, the Minor Wave 5 has
not yet been confirmed as complete. Therefore, the fifth sub-wave itself cannot
yet be considered complete. Consequently, on the larger timeframe, Wave 3 also
remains incomplete, since its fifth sub-wave must finish before the larger Wave
3 can be considered complete.
Let us now move to the next
chart to examine the internal structure of this final minor wave in greater
detail.
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| Figure 5 |
One interesting feature of
this structure is that Minor Wave 2 retraced approximately 61.8% of Minor Wave
1, indicating a relatively deep correction. The retracement also took some time
to develop, giving Wave 2 a clear corrective character.
We can now examine Minor Wave
4 in the context of Elliott Wave alternation. Compared with Wave 2, Wave 4
appears to be a shallower and relatively quick correction, suggesting a
different corrective character.
To examine this more
objectively, I have applied the Fibonacci retracement tool to Wave 4 and will
analyse its retracement level and structure in the next step.
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| Figure 6 |
Measuring Minor Wave 4 against
Minor Wave 3 on the weekly chart shows that the correction has retraced only slightly
more than 38.2% of Wave 3 and has developed relatively quickly.
This behaviour is consistent
with the principle of alternation in Elliott Wave theory, as Minor Wave 2 was a
deeper and more time-consuming correction. However, it is still too early to
confirm whether Minor Wave 4 has already been completed or is still developing,
and whether Minor Wave 5 has begun to form.
To determine which scenario is
unfolding, we need to examine the internal structure of Minor Wave 4 and the
potential development of Minor Wave 5 in the next chart.
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| Figure 7 |
If we assume that Minor Wave 4
has already been completed, then the current price structure suggests that Minor
Wave 5 may be developing as an Ending Diagonal. As shown on the chart, the final
wave (e) of the diagonal is not yet complete and may require further price
development.
The blue arrow illustrates the
possible path of this Wave (e) and indicates how the price may evolve if this
Ending Diagonal scenario plays out. This is one possible interpretation of the
current structure, rather than a confirmed outcome.
We will now examine the next
possible scenario to see whether the price structure supports an alternative
Elliott Wave count.
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| Figure 8 |
The same price structure can also be interpreted from a different perspective. Earlier, we considered the possibility of an Ending Diagonal within Minor Wave 5. However, an alternative interpretation is that this is not an Ending Diagonal, but rather a corrective structure, indicating that Minor Wave 4 may still be incomplete.
Under this scenario, Wave (A) and
Wave (B) have already been completed, while Wave (C) is still developing. If
Wave (C) unfolds to the downside, the price could follow the path illustrated
by the blue arrow, potentially completing the larger Minor Wave 4 before the
next upward move begins.
This highlights an important
aspect of Elliott Wave analysis: multiple valid scenarios can exist until the
price structure provides confirmation. Therefore, rather than assuming a single
outcome, we need to observe how the structure develops and determine which wave
count is ultimately confirmed by the price action.
This concludes our Elliott
Wave analysis of Shriram Finance. The purpose of this analysis is to present
the possible wave structures and their potential paths, not to classify the
stock as bullish or bearish. The subsequent price action will determine which
scenario is validated.
Disclaimer: The
information and Elliott Wave analysis presented in this article are intended
solely for educational and informational purposes. They represent the author's
interpretation of market price action and should not be considered as
investment, financial, or trading advice. The author is not a SEBI-registered
Investment Adviser or Research Analyst. Readers should conduct their own
research and consult a SEBI-registered financial professional before making any
investment decisions. Investing in the stock market involves risk, and past
performance does not guarantee future results.