Sun Pharmaceutical Industries Ltd, with a market capitalisation of more than Rs 1.6 lakh crore, rose by about 38 percent in the last one year, compared to the 48 percent rally seen in the Nifty50, and 40 percent gain in the Nifty Pharma index in the same period.
In line with the benchmark indices, the Nifty Pharma also touched record highs on Friday, at 14,715, but Sun Pharma has been consolidating in a narrow range after hitting a high of Rs 721.90 on May 11, 2021.
Since then, the stock has been moving in a 100-point range. The recent price action pushed the stock above the crucial resistance zone of Rs 665-670, which opens the door for the stock to challenge its 52-week high of Rs 721.
Experts feel that a breakout from the resistance levels, with high volumes, gives comfort to the bulls, and the next target is placed at Rs 810, which translates into an upside of over 17 percent from the July 16 price of Rs 688 on the BSE.
Sun Pharma is India’s top drug maker and the world’s fourth-largest specialty generic pharmaceutical company. The company develops, manufactures and markets branded and generic formulations and active pharmaceutical ingredients (APIs) in India and the rest of the world.
“Sun Pharma has been in a long-term uptrend. The stock, unlike its peers, is moving steadily and giving periodic dips. This price action has led to the formation of a higher top, higher bottom structure, which is visible in weekly charts shown below,” Siddarth Bhamre, Director, Alternate Investments & Research, InCred Capital, said.
“This positive price structure is ensuring that the stock moves decisively above its previous resistance zone of Rs 665-670 in September 2018. From a short-term perspective, the stock is moving above its resistance of Rs 685-690, with volumes higher than the previous day in the first two hours of the trade,” he said.
Bhamre further added that long formations were observed in the beginning of the last week, which ensured a bounce from its support range of Rs 660-665. All the above factors suggest the stock may continue its upward trend.
The stock can be bought in the range of Rs 685-695, for a target of Rs 810, and a stop- loss can be placed below Rs 652. The time horizon is two months, recommends Bhamre.
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