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The outlook for the stock of Wockhardt is bullish. The stock surged 7 per cent with strong volumes on Monday. This rally on has taken the stock well above a key near-term resistance at ₹740. This level of ₹740 will now serve as a good support. Intermediate dips to this support level may find fresh buyers coming into the market. Also there is a cup and handle pattern formation visible on the charts. This is a bullish reversal pattern. The sharp rise on Monday is giving an initial sign of confirmation of this pattern.
A rally to ₹780 or ₹785 is likely in the near-term. Further break above ₹785 will increase the likelihood of the upmove extending to ₹800 or even ₹825 thereafter.
Short-term traders can go long and accumulate on dips at ₹745. Stop-loss can be placed at ₹735 for the target of ₹785. Revise the stop-loss higher to ₹760 as soon as the stock moves up to ₹770. The bullish outlook will get negated if the stock declines below ₹740. In such a scenario, the stock can fall to ₹710 or even lower levels thereafter.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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