Technical Analysis

Sun Pharma hovers above a key support

Yoganand D | Updated on June 02, 2019 Published on June 02, 2019

A break above ₹500 is needed to alter the downtrend and take the stock up to ₹600

Here are answers to readers’ queries on the performance of their stock holdings.

What are the short and long-term views for Sun Pharmaceutical and Aditya Birla Fashion?

Pradeeo Kabra

Sun Pharmaceutical Industries (₹409.5): The stock of Sun Pharma has been in a long-term downtrend since recording a new high of ₹1,200 in April 2015. Both the medium as well as short-term trends are down. The stock hovers well below its 50 and 200-day moving averages.

In early May, it tumbled sharply and registered a 52-week low at ₹350, but bounced up, recovering the loss and managed to close in the significant support band between ₹390 and ₹400.

This band cushions the stock. There has also been an increase in daily volumes over the last three weeks. The daily indicators show mixed trends.

An upward reversal from the current support band is possible in the short term. This can take the stock up to ₹450 and ₹480 in the medium term.

A strong break above ₹500 is needed to alter the medium-term downtrend and take the stock up to ₹550 and ₹600 over the long term.

Subsequent resistance is placed at ₹665 levels. On the other hand, a strong plunge below ₹390 can drag the stock down to ₹350 in the short term. Next key supports are at ₹330 and ₹300.

Investors with a long-term perspective can stay invested and buy in declines with a stop-loss at ₹340.

Aditya Birla Fashion & Retail (₹211.5): Since taking support from the long-term base in the ₹125-135 band in July 2018, the stock has been in an intermediate-term uptrend. However, it encountered a key resistance at ₹235 this March and began to decline. The stock has been in a short-term downtrend since then.

Key resistance at ₹220 is limiting the stock. On Friday, the stock fell almost 3 per cent forming a bearish engulfing candlestick pattern at the key hurdle of ₹220. This is a bearish reversal pattern with bearish implications. The indicators in the daily chart displays mixed signs. The stock can continue to trend down and remain in the downtrend as long as it trades below ₹220.

A strong fall below the key support at ₹190 will reinforce the downtrend and drag the stock down to ₹175. A further fall below ₹175 will alter the intermediate-term uptrend and pull the stock lower to ₹150 and ₹140 in the medium term.

Conversely, an emphatic break above the near-term resistance level of ₹220 will alter the downtrend and take the stock up to ₹230 and ₹235 levels. A rally beyond ₹235 will strengthen the uptrend and accelerate the stock northwards to ₹250 and ₹263 in the long run. Investors with a long-term horizon can stay invested with a stop-loss at ₹160.

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Published on June 02, 2019
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