Technical Analysis

Tech Query: What is the long-term outlook for Sun Pharma and Wockhardt?

Gurumurthy K | Updated on October 23, 2021

I have shares of Sun Pharmaceuticals and Wockhardt. Please give the long-term outlook for these two stocks.

Pradeep Kabra

Sun Pharmaceutical Industries (₹812.55):

The stock has been in a strong uptrend since March last year. Important short-term supports are at ₹780 and ₹740. The stock will come under pressure only if it breaks below ₹740.

In a such a scenario, a fall to ₹700-670 is possible. But that will be a good opportunity to accumulate this stock. Immediate resistance is at ₹861 – the 61.8 per cent Fibonacci retracement resistance.

Considering the continuous rise for more than a year, this resistance is likely to hold on its first test.

As such, the stock can either consolidate between ₹740 and ₹860 for some time or see a corrective fall to ₹700-670 on a break below ₹740 as mentioned above.

However, the long-term picture will continue to remain bullish and the chances are high for the uptrend to remain intact.

So, the stock is more likely to sustain above the ₹700-670 support zone in case if a corrective fall is seen.

Chances are high for the stock to breach ₹861 eventually which will then pave way for a fresh rise to ₹950 and ₹1,100 in the coming months.

Hold on to this stock and accumulate on dips at ₹760 and ₹710. You can have a stop-loss at ₹610.

Wockhardt (447.6): The stock of Wockhardt seems to be lacking strength. The charts are not looking as strong as Sun Pharmaceuticals. The uptrend, that was in place since March last year, has been broken. In addition to this, there is a head and shoulder reversal pattern in the making.

The neckline support of this pattern is at ₹387. A strong break below ₹387 will drag the prices down to ₹235-₹200 and even lower in the coming months. Even if it manages to sustain above ₹387, the stock has to rise past ₹550 decisively to become strongly bullish. But that might take a long time and may also need some strong trigger to break above ₹550.

So, you can very well exit this stock at current levels. You can very well consider parking a part of this sale proceeds, say 30 per cent, in Sun Pharmaceuticals at current levels itself.

The balance amount you can use to accumulate on dips in Sun Pharmaceuticals itself at levels mentioned above or in some other stocks of your choice.

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Published on October 23, 2021

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