Technical Check: This pharma stock poised for over 30% upside in next 6 months; here’s why

GlaxoSmithKline Pharmaceuticals Limited has risen by over 15 per cent compared to 23 per cent upside seen in the Nifty50 so far in 2021.

The stock has been under pressure from July to October period where shares of Glaxo Pharma fell by about 20 per cent, but after hitting a low of 1450 it has recovered to hit a fresh 52-week high of Rs 1871.80 on 13 December.

The recent price action on daily and monthly charts suggests that the stock is posed for a big move on the upside. On the monthly charts, the stock has formed a bullish candle which triggered a range breakout, suggest experts.

If the momentum continues, the pharma major could clock a target closer to Rs 2,400-3,000 in the next 2 quarters or six months that translates into an upside of 28 per cent from Rs 1,866 recorded on 14 December.

The stock trades as a trailing 12 months (TTM) P/E of 64.11x and an Earnings Per Share (EPS) of Rs 29.11, according to BSE India.

GlaxoSmithKline Pharma with a market capitalization of more than Rs 31000 cr hit a fresh 52-week high of Rs 1917 on the BSE on 13 December, but the stock has been in action since 2008.

The stock is trading above all the major short- and long-term moving averages of 30,50,100 and 200-Days Moving Average (DMA).

GlaxoSmithKline Pharmaceuticals Limited started its up move from 400 in Jan 2008. The stock has rallied over 300 per cent since then.

Technically, the stock now trades above most averages, forming higher tops and higher bottoms and reached closer to a high of 1925 recorded in March 2016.  

“Between 2015 and 2021, it traded in a zone of 1000-1800 most of the time. In between, a higher bottom formation developed at 1020 in March 2018 and 1046 in March 2020 during consolidation phases,” Bharat Gala, President - Technical Research, Ventura Securities Ltd, said.

“Recently, on the monthly charts, the stock has formed a bullish candle, giving a range breakout and making a high of 1907,” he said.

Gala further added that the MACD, Aroon Up/down and Demand Index indicator suggest a possible firm corrective uptrend. The possible targets are 2400-3000.

If the stock price corrects downwards the buy levels are (1800-1730)-1678--(1625-1590). Stop Loss to be observed in the trade is 1475, recommends Gala.

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