Hot Stocks | Sun Pharma, Lupin, Torrent Pharma are three short-term ideas

Vinay Rajani

For the last five sessions, Nifty has been trying to sustain above 9,100 and has been consolidating in the narrow range of 9,200 and 9,270 on a closing basis.

After bearish development on the short-term charts, Nifty has not seen follow up selling. The level of 9,100 has been acting as strong support for the index.

Any level below 9,116 could result in selling momentum in the Nifty.

Below 9,116, the index could slide to the next supports of 8,980 and 8,700, which happens to be 38.2 percent and 50 percent retracement of the entire rise seen from 7,511 to 9,889.

On the upside, the range of 9,500-9,550 could act as a resistance, where calls have been written and an 'Island' unfilled gap is placed.

Daily MACD Indicator has been struggling to move above its zero line. Daily DMI Indicator has also reached the contraction zone after the positive move, which indicates weakness in the short-term trend.

Breadth Indicators on the Nifty500 daily chart is giving the sign of market weakening. New high low index and MCclellan Summation Index have turned bearish on the daily chart.

This has happened for the first time after March 5, 2020, when the bullish signal was generated by the same indicators.

It is advisable to remain cautious on the market. Any level below 9,116 could bring momentum selling in the Nifty, which could drag it towards 8,980 and 8,700 targets.

Pullbacks and rallies should be utilised to lighten long commitments. However, the market would remain stock and sector-specific. Bearish markets are likely to be headed by the banking and finance sector,  while pharma and IT would remain outperformers.

Here are three stock ideas for the next 3-4 weeks:

Sun Pharma | Buy | LTP: Rs 465.50 | Target price: Rs 510 | Stop loss: Rs 437 | Upside: 10%

The primary trend of the stock has been bullish as it has been forming higher tops and higher bottoms since March 2020.

The stock is trading above its 50, 100 and 200-DMA. It has reversed north from the previous top support on the weekly charts.

The relative strength of the stock has been significantly higher as compared to Nifty for the last many weeks. Weekly RSI and MACD have reached above their previous peaks and are showing strength in the trend.

The pharma sector looks strongest amongst the sectors.

Lupin | Buy | LTP: Rs 852.80 | Target price: Rs 920 | Stop loss: Rs 809 | Upside: 8%

After a few days of consolidation, the stock has resumed its primary uptrend. In the month of April 2020, it broke out from a long-term downward sloping trend line on the monthly charts.

This month, the stock should see follow up buying. It is placed above all important moving averages. Indicators and Oscillators are also showing strength in the trend.

Torrent Pharmaceuticals | Buy | LTP: Rs 2,506 | Target price: Rs 2,725 | Stop loss: Rs 2,350 | Upside: 9%

The stock has given a symmetrical triangle pattern breakout on the daily charts. It is very near to its all-time high.

The primary trend has been bullish with higher tops and higher bottoms on the daily and weekly charts. This stock is one of the best-performing stocks from the pharma sector.

Volumes have been rising along with the price rise for the last 4 sessions.

(The analyst is Senior Technical & Derivative Analyst at HDFC securities)

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