Change is the only constant.
Well, Nifty 50 is really not interested in that statement because it continues to remain messy. But in this messy move, we’ve seen certain sectors outperform the others. One among the outperformers is the Pharmaceutical sector.
Are there any new breakouts in the sector constituents? A few, yes.
Let’s do a deep dive in this sector and see what comes up.
Let’s take a look at the sectoral chart first and see what we have on our hands.
Click on chart to enlarge view.
Nifty Pharma broke out above its long-term big-base of close to six years. The price seems like it has absorbed all the overhead supply at 13,500 and looks good for a fresh new leg of the rally. The next target we’re tracking is 18,000.
We’re watching out for 13,500 to hold its ground and would be wary of this move only if the price fails to float above this level.
In our Trade of the Week post we covered two ideas from this sector. Check it out here.
Let’s take a look at our roster sheet for today!
First up is a name that has been on our radar for the longest time and that is Wockhardt Pharma.
We’ve been waiting for the price to move past the highs made on the last day of last year, and we finally have it!
The indicator is in bullish momentum territory and the price has broken past a crucial long-term resistance that has been in place for close to three years. As long as the price remains above 555, we are bullish with a target near 685, followed by 825.
Click on chart to enlarge view.
Cadila Healthcare has featured in our Quarterly Playbook as well as our Monthly Strategy Conference Call in May and continues to display strength. The price has moved past 558, breaking out of a four-year base. There are several stocks that are breaking out of big bases, just like the sectoral chart.
We are bullish above the risk management level of 558 with a target near 778.Lost Password?
Auro Pharmaceuticals is another name that’s popping right off the charts. The more charts you look at, the bigger the base breakouts get! A six-year base breakout here!
Auro Pharma is holding its ground above the risk management level of 895 and has also witnessed a fair bit of follow-through post the breakout. The next target that we’re tracking is 1,270.
Alembic Ltd had been moving sideways since September 2020 and finally broke out of that range in the week gone by. We saw a big bullish candlestick breakout, which is always a positive at crucial levels of resistance. With this move, the price is out of its minor consolidation.
We are positive above the level of 111 with a target near 165.
FDC took a little detour from its trend since September last year, but it looks like its attempting to move higher now. We’re looking at a break out above the level of 330 on the daily chart as the indicator begins to feel comfortable in bullish momentum territory.
We are bullish above the level of 330, with a target near 380.
Here’s a name that’s on the move- SPARC. Sun Pharma Advanced Research Company has broken out of an almost three-year base. With this particular move, the price has overcome a pretty decisive level of resistance that has been acting like a big boulder at 210.
While the immediate target to track is 253, we’re following this move to see if the price has enough momentum in it to breach 253 and aim for 360 next
Glenmark has made some progress too! The price has moved past the overhead resistance at 582 and looks good for a move towards 842. The indicator is in bullish territory, but what we’d like to see is a weekly close above 582. So this name is definitely on our ‘alert list’.
Speaking of setting alerts, here’s another name from our list – Eris Lifesciences. the level we’re watching out for is 650. If we get a weekly close above that level and the price continues to display strength, then we’d be bullish with a target of 850.
But until the point of confirmation, we’d like to wait it out.
Sequent Scientific is another name that comes up here. The price managed to close above the overhead resistance of 275, but we’re still not seeing that follow through. But that does not take away from the fact that this is a stock in a strong rally, and may pick up pace real soon!
We are bullish as long as the price remains above 275, with a target near 417.
One name from the Healthcare sub-group, that’s displaying strength is Fortis Healthcare. We got a nice, clean breakout in the week gone by, from a four-year long-term base. With the indicator heading higher in bullish momentum territory, the next level we’re tracking is 304, with a risk management level of 228.
Aarti Drugs is up next. The price has been part of an extremely narrow trading range and we’ve now seen a breakout of that seven-month range. The indicator too, is at its highest point since October last year, alluding to the strength that’s building in the stock.
We are bullish only if the price continues to hold above 773, with a target near 1,190.
There’s one more name that caught our eye, although it doesn’t belong to our stock universe. But since the move seems strong, we thought it’d be nice to talk about it here.
Gufic Biosciences has moved out of a big base with a strong breakout on the daily chart. What we’re tracking here is the weekly close that can confirm this particular breakout. In the event that we do get a confirmation, the price looks good for a move towards 242, with 164 acting as the risk management level.
This was a round-up of the Pharma sector, where we went through all the ideas that we thought could be interesting as they trade in the weeks and months ahead. It is crucial that the sectoral index remains above 13,500 for the follow-through of the move to reflect in the stocks.
Please keep in mind that it is important to follow a risk management strategy in the market. Have your levels in place and be mechanical with your trades. A messy market can ruin many portfolios if not tracked diligently!
Thanks for reading and please let us know if you have any questions.