The Nifty Pharma index was hovering around its 52-week high at 19,045.75, rising 175 points or 0.93 percent in the afternoon trade on on February 19. Over the past year, the index has delivered impressive returns of more than 60 percent following a robust breakout in November 2023.
Biocon Ltd (up 4.84 percent), Granules India Ltd (3.75 percent), Natco Pharma Ltd. (3.65 percent), Sanofi India Ltd (2.78 percent), and Aurobindo Pharma Ltd, which has gained 2 percent, are among the notable gainers.
Is there still room for further upside in the pharma sector? Which stocks present buying opportunities at current levels?
The Nifty Pharma is in an overbought territory on both weekly and monthly timeframes. Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy, pointed to a Fibonacci projection from the lows of March 2020 to a swing high in October 2021, with a subsequent retracement indicating a 100 percent Fib projection level at 20,000. This suggests that the index may still have the potential for upward movement.
Gupta recommends investors consider buying into stocks that offer attractive valuations and substantial upside including Dr Reddy’s, Cipla, Aurobindo Pharma and Abbott India.
Nishit Master, Portfolio Manager at Axis Securities PMS, expects the Nifty Pharma index to continue to outperform the broader market, given the increase in approvals from the USFDA, lower chemical prices and stable domestic demand.
"We continue to like and hold stocks like Lupin, Sun Pharma, Ajanta Parma and Suven Pharma across various portfolios, " Master said.
Akshay Bhagwat, Senior Vice President of Derivative Research at JM Financial, said, "Nifty Pharma at ATH, more momentum-based trades can be expected for short-term trading in select Pharma names like Sun Pharma, Dr. Reddy's and Cipla."
He is also bullish on healthcare space stocks. Apollo Hospital, Lal Path Lab and IPCA Labs are among the names of buying watchlist.
As per Bhagwat, "Sun Pharma trades in a firm uptrend. Post a slight correction, the prices are showing demand remerging from the 1,500-1,510 area, which is setting up as a short-term support base."
Renewed buying interest can propel the stock to revisit and go past its recent swing high of Rs 1,560. "Trading buy with SL below 14,82,," he said
Biocon, Dr Reddy's, Granules, Natco Pharma and Pfizer are among the Nifty Pharma stocks signaling "buy" based on other technical indicators.
Source: web.strikemoney.com
The image shows Nifty Pharma constituents offering "buy signals" according to their technical RMI placement. The Rohit Momentum Indicator generates buy and sell signals and is a non-range bound indicator.
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