The Nifty Pharma index had made a double bottom formation at around 8,300 and bounced back sharply from that level. From this low, it bounced back to 10,780, returning 30 percent in just 4 months. But since September, it has corrected to 61 percent retracement.
The index seems to be bouncing back from the demand zone and last week, it closed with a hammer on the chart. This week, any tick above 9,350 will trigger fresh buying in pharma stocks.
Cipla: CMP Rs 540 (Upside: 24 percent)
Cipla has been trading in the upward rising channel for the last two and a half years, where it has bounced back multiple times from the lower channel. However, thereafter, it surrenders the gain from the higher end of the channel.
Last week, the stock bounced back sharply from the lower end of the channel again with bullish engulfing candle on the weekly chart. Going ahead, it can bounce back till Rs 600-670 levels in coming months. It will be invalidated if it closes below Rs 500.
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Source: Moneycontrol
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