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We recommend a buy in the stock of Biocon from a short-term perspective. It is apparent from the charts of the stock that in late August this year, the stock decisively broke out of an inverse head and shoulders pattern and continued its uptrend. Since June low at Rs 208, the stock has been on an intermediate-term uptrend. Short-term trend is also up for the stock. After testing key resistance at Rs 300 for a few sessions, the stock conclusively breached the aforesaid resistance by gaining 4 per cent with above average volume on Thursday.
The stock is hovering well above its 50- and 200-day moving averages. Both daily and weekly relative strength index are featuring in the bullish zone. Similarly, the daily as well as weekly moving average convergence divergence indicators are hovering in the positive terrain implying upward momentum.
Considering that the stock's uptrendline is intact and breach of key resistance, we are bullish on the stock from a short-term perspective. We expect its rally to continue and reach our price target of Rs 319 or Rs 325 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock while maintaining stop-loss at Rs 300.5 levels.
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