Monday, April 11, 2016

Applying Time Cycles -Sun Pharma gets approval from USFDA but is it already discounted?

The Pharma sector has been moving in doldrums from last one year. Due to USFDA quality issues companies such as Sun Pharma, Lupin, Dr.Reddy, Cipla etc. has shown sharp down move. Lead by this Pharma sector is underperforming from last one year. However, after many months some good news is here where Sun Pharma has got approval for eye inflammation drug recently. The stock reaction in today’ session is neutral where prices are consolidating between the range. Now question arises will stock show trending move in next few days and if yes then in which direction? We believe that news only creates short term spikes but post which trend should start in the direction of ongoing move. So what to expect next for Sun Pharma? Below part of research is taken from today’s “The Financial Waves Short Term Update”:

Sun Pharma weekly chart:
Sunpharma,Technical Analysis,USFDA

(Part of research taken from today’s research report)

Wave analysis:

Since the start of 2015, Pharma index has continued to move in down trend. This sector was outperforming prior to 2015. However, now the story has changed as underperformance has continued from last 1 year. In previous month when recovery was witnessed broader indices, Pharma sector continued to tumble and lost more than 12%. We have picked up Sun Pharma which has reversed on downside from the crucial channel resistance.

The above weekly chart indicates that prices are intact in downward moving channel and forming negative bars. 20 weeks Exponential moving average has continued to sustain below 50 weeks EMA which indicates weakness. Moreover 26 weeks Time Cycle has been working well to capture the tops. Same cycle is due now which indicates that one should remain cautious as prices can move lower sharply. From medium term perspective, stock has important resistance at 900 levels.

In short, Sun Pharma structure is weak. Any move ………….

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