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:
(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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