Technical Check: Long bullish candle on weekly charts puts this pharma stock on buyers radar; see 20% upside in 6-9 months

Cipla Ltd, the Indian multinational pharma company, rose 29 per cent in the last year compared to 11 per cent gain seen in the Nifty50 in the same period.

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The pharma stock bucks trend as it rallied 12 per cent in a week compared to 6 per cent rally seen in the Nifty50 in the same period. The recent rally despite muted global cues resulted in a breakout which puts Cipla on buyers' radar.

The stock with a market capitalization of more than Rs 84,000 cr, hit a fresh 52-week high of Rs 1057 on 14 March and technical suggest that the stock could well surpass 1200 levels in the next 6-9 months translating into an upside of about 20 per cent from Rs 1044 recorded on 11 March, suggest experts.

Cipla is the third-largest pharma company in India, the third-largest in the private pharma market of South Africa (IQVIA March 2021) and the largest Indian exporter to emerging markets and amongst the most dispensed generic players in the US.

The Company has a presence in branded and unbranded generic market franchises, with leadership positions in India, South Africa, priority territories in Emerging markets, Europe, and the US, across major therapies and products categories.  

Cipla produces over 200 generic and complex APIs and supplies to 63 countries across the globe, the company website said. The company has a robust pipeline of 75+ APIs across regulated markets in varying stages of development.

Technically, the stock is trading well above the crucial short- and long-term moving averages such as 30,50 and 100-Days Moving Average.

The stock reclaimed 50-DMA placed at 931 on 3 March, 2022 and since then we have seen a vertical rise in the stock, data from Trendlyne showed.

 After March 2020 low of 355, the stock price has been in a long-term uptrend forming a higher top and higher bottom on the weekly chart i.e., each new high after an up move is higher than the previous high, and each new low after a decline is higher than the previous low.

“For the last 8 months, the stock has been trading in a sideways range between 850 and 1000 odd levels. It has been consolidating after the strong up move and formed a base for the next leg of the rally. This week stock has given a breakout on the upside with strong momentum and high volumes,” Ashish Chaturmohta, Director, Equity Research, Sanctum Wealth, said.

“It has formed a long body bullish candle on the weekly chart at breakout indicating buying participation in the stock. The Moving average convergence and divergence line (MACD) has given positive crossover with its average on the weekly chart. MACD has given turned up from equilibrium level of zero suggesting start new uptrend,” he said.

Chaturmohta said that the stock can be bought at current levels and dips to 1020 levels with a stop loss of 970 for a target of 1250 in the coming 6-9 months.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)