Buy Lupin; target of Rs 940: ICICIdirect.com
ICICIdirect.com is bullish on Lupin and has recommended to buy the stock in the range of Rs 875-865 for a target of Rs 940 with a stop loss below Rs 835 on a closing basis, in its December 03, 2013 research report.
December 03, 2013 / 13:46 IST
ICICIdirect.com's report on Lupin
The share price of Lupin has been seen in a steady uptrend on all time frames. In the short-term, the stock price has been witnessing a corrective decline over the past month. However, such corrections provide a fresh entry opportunity in the stock for positional traders as described below:The corrective price decline from the mid-October highs of Rs 945 saw the stock taking support precisely at the 50 percent Fibonacci retracement of the August-October 2013 rally (742-945), which also coincides with the rising trend line connecting March, April and August 2013 lows. More importantly, both major corrections since March 2013 have retraced their preceding rallies by 50 percent and then resumed an uptrendThe most important observation on the price chart is that while the stock maintains its rising peaks and troughs, none of the rising segments since March 2013 have been retraced in faster time suggesting an overall positive price structure from a medium-term perspective. More recently, the rally off August lows (742) consumed 30 trading sessions to hit the lifetime highs of Rs 945 while the subsequent correction lasted more than 30 sessions and retraced the rally only by 50 percent highlighting the overall positive price structureOver the past seven sessions, the stock consistently found support near Rs 840 marked by a rising trend line and Fibonacci retracement and resumed its up trend in Monday’s session as indicated by a strong Bull candle. Monday’s price action led the stock price to settle above the past 10 session’s high suggesting an impulsive behaviour. From long term perspective stock is seen trending up above the major trend line drawn connecting lows of January 2009 and October 2012 which remains a valid support. Monthly RSI is seen trending up above its bull market support of 60 supporting long term bullish view.Earlier, at the August 2013 lows of Rs 742, the stock price took support precisely at the consolidation lows during June 2013, which coincided with key 50 percent retracement. A similar behaviour was witnessed during the recent correction as well as the stock price found support near consolidation lows of September 2013. As per the Dow Theory principle, key historical highs and lows acts as a support for future price action. Lupin has exhibited the same tendencyAmong oscillators, the 14 day RSI is seen bouncing off its own support near 35-40 range, which is its bull market support. The oscillator is currently reading above 50 indicating a bullish trend for the underlying stock.Conclusion: Following the bounce off key support and observing the overall technical set-up, we expect the share price of Lupin to challenge its November 2013 highs placed at Rs 945 in the short-term. Therefore, it provides a good entry opportunity to ride the up leg.Strategy: Buy Lupin in the range of Rs 875-865 for a target of Rs 940 with a stop loss below Rs 835 on a closing basisDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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