Technical Analysis

Stock trading call: Buy Sun Pharma Advanced Research Company

Yoganand D | Updated on January 12, 2020 Published on January 12, 2020

Investors with a medium-term perspective can buy the stock of Sun Pharma Advanced Research Company (SPARC) at current levels.

Last Friday, the stock jumped 7 per cent accompanied by above-average volume, decisively breaking above a key long-term resistance level of ₹170.

For the week, the stock had gained 11.7 per cent. Following a long-term downtrend from a January 2018 high of ₹532, the stock had registered a multi-year low at ₹107 in July 2019. Consolidating sideways between ₹110 and ₹170, the stock had formed a double- bottom pattern with the neck-line at ₹170, a bullish reversal pattern, in the second half of 2019. Last week’s 11 per cent jump by the stock has decisively broken the pattern neckline.

This rally has strengthened both the medium- as well as short-term uptrend.

Further, the stock had breached its 200-day moving average line at ₹155 in early December 2019, and hovers well above it.

The daily relative strength index (RSI) hovers in the bullish zone and the weekly RSI is on the brink of entering the bullish zone from the neutral region.

Moreover, the daily as well as the weekly price rate of change indicators feature in the bullish zone, implying buying interest.

The medium-term outlook is bullish for SPARC. It can extend the uptrend and reach the price targets of ₹200 and ₹210 in the ensuing weeks, with a minor pause at around ₹200. Traders can buy the stock with a stop-loss at ₹170.

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Published on January 12, 2020
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