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

a chunk of the pharma sector, which has recovered more than 200% since the 2020 COVID low, could well surpass the Rs 1,000 mark and set a new multi-year high in the next 2 months, experts suggest.

The pharmaceutical stock rebounded from Rs 315 recorded on 23rd March 2020 to Rs 979 on 17th October 2022, an uptrend of over 200% in two years

Short-term traders who missed the rally can buy the stock now or on dips for a possible target of over 1,000 rupees in the next 1-2 months, experts suggest.

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

The stock broke out of an inverted head and shoulders formation on the daily charts in October, which is a positive sign for the bulls. It is also trading above the crucial moving averages, supporting a bullish bias.

Image - 2022-10-19T094031.863ET STAFF

On the price front, the stock price is trading above the 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; therefore, some consolidation cannot be ruled out. The Relative Strength Index (RSI) is at 71.9. An RSI above 70 is considered overbought. This implies that the stock may have a pullback.

MACD is above its mid and signal line, this is a bullish indicator, as shown by Trendlyne data.

Pharmaceutical stocks appear to be taking the lead on Nifty50. Technically, the Nifty pharma sector declined to a key support level and set a base for 4 months.

“Nifty Pharma shows the presence of buyers after strong selling pressure. from the pharmaceutical pack,

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

“Sun Pharma formed a higher high and higher low sequence from the Covid low. The stock has formed a bullish head and shoulders inverse reversal pattern,” he said.

“The stock has broken out of the mentioned pattern, confirming the bullish implication of the pattern. Stocks are sailing above the short- to long-term moving averages on all timeframes,” Shah added.

Based on the above rationale, the stock can accumulate in the range of Rs 975-950 with a stop loss of Rs 920. On the higher side, the stock has upside potential to the Rs 1,080 level, recommends Shah.

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times) Chart Check: 200% from Covid lows! Time to accumulate this pharma stock on dips

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