ICICIdirect.com`s research report on Divis Laboratories“Divis Laboratories, as the August derivatives series comes closer to settlement, the Nifty is trading close to our monthly derivatives target of 8000. From the lows of 7540 on August 8, the Nifty has pulled back over 5% to 7950. This strong surge was started by the Bank Nifty. However, near settlement, stocks from the pharma space are again seeing a resurgence of buying interest. With the rupee is still trading above 60 levels, the depreciating bias is continuing in the currency, which is helping IT and pharma stocks to move up. We have identified Divis Labs as one of the stocks, which is likely to move up on the back of short covering.” “From July, shorts are getting covered in Divis Laboratories. We have seen closure of 25% open interest from July onwards and the stock has formed a base near Rs 1500-1530 during this period. It seems it may witness good upsides on the back of short covering in the coming sessions. At the start of the August series, it had witnessed good delivery based buying near Rs 1495. The delivery buying was four times higher then the rest of the month's average. The same delivery pick-up was seen previously at the price levels of Rs 1237 and Rs 1357. Quite high volumes were seen in the stock at Rs 1450 levels on August 12. Thereafter, it consolidated for some time and did not breach those levels again. As a follow up, the recent bounce back was seen. Since April 2014, Divis was finding it tough to take out Rs 1550. In the recent up move, it has moved beyond this level, strengthening the probability of a good pullback in the stock. Buy Divis Lab in cash in the range of Rs 1529-1549 with a target of Rs 1795,” says ICICIdirect.com research report.
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