Chart Check: 200% from Covid lows! Time to accumulate this pharma stock on dips

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, part of the pharma sector, which has rallied more than 200% from COVID low of 2020 could well surpass Rs 1,000 levels to hit a fresh multi-year high in the next 2 months, suggest experts.

The pharma stock rallied from Rs 315 recorded on 23 March 2020 to Rs 979 as on 17 October 2022 which translates into an upside of over 200% in 2 years

Short-term traders who missed the rally can look at buying the stock now or on dips for a possible target above Rs 1,000 in the next 1-2 months, suggest experts.

The stock with a market capitalisation of more than Rs 2.3 lakh crore has been making higher highs and higher low formation after hitting COVID lows back in March 2020.

The stock broke out from an inverse head & shoulder pattern in October on the daily charts which is a positive sign for the bulls. It is also trading above crucial moving averages which supports a bullish bias.

On the price front, the stock price is trading above crucial short- and long-term moving averages of 5,10,30,50,100 and 200-DMA which is a positive sign for the bulls.

The stock is trading near overbought levels; hence, some consolidation cannot be ruled out. The Relative Strength Index (RSI) is at 71.9. RSI above 70 is considered overbought. This implies that the stock may show a pullback.

MACD is above its center and signal line, this is a bullish indicator, Trendlyne data showed.

Pharma stocks seem to be leading the charge in Nifty50. Technically, the Nifty pharma sector retraced to an important support level and formed a base for 4 months.

“Nifty pharma shows the presence of buyers after strong selling pressure. From the pharma pack,

is the leading stock,” Kapil Shah, Technical Analyst, Emkay Global Financial Services and Trainer- FinLearn Academy, said.

“Sun Pharma has been forming a higher high and higher low sequence from the covid low. The stock has formed a bullish reversal inverted head and shoulder pattern,” he said.

“The stock has given a breakout from the mentioned pattern, which validates the pattern’s bullish implication. Stock is sailing above short to long-term moving averages across all the time frames,” added Shah.

Based on the aforementioned rationale, the stock can be accumulated in the range of Rs 975 to 950 range with a stop loss of Rs 920. On the higher side, the stock has an upside potential up to the Rs 1,080 level, recommends Shah.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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