Moneycontrol PRO

Trade Spotlight: Aarti Drugs, Caplin Point & Aurobindo Pharma hit 52-week high, what should investors do?

Experts are of the view that investors should trade with caution, and a more sustainable move can be seen only a close above 11225. Immediate support is placed at 11,100 levels.

August 07, 2020 / 08:24 AM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Bulls pushed benchmark indices above crucial resistance levels on August 6. The S&P BSE Sensex reclaimed 38,000 while the Nifty50 closed at 11,200 levels.

Let’s look at the final tally on D-Street on Thursday – the S&P BSE Sensex rose 362 points to 38,025 while the Nifty50 rose 98 points to close at 11,200.

Experts are of the view that investors should trade with caution, and a more sustainable move can be seen only on a close above 11,225. Meanwhile, immediate support is placed at 11,100 levels.

Stocks like Aarti Drugs, Caplin Point, and Aurobindo Pharma were in focus. All three stocks hit a fresh 52-week high on Thursday.

Here's an expert's take on what investors can do on August 7:

Close

Expert: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

Aarti Drugs: Rs 2,000 is the trend decider level

The stock hit a 20 percent upper circuit on Aug 6. The stock has been soaring rapidly over the last five weeks, rallying from Rs 1,300 to Rs 2,250 within the period.

The rally was price dominating along with incremental volume activity. On the daily and weekly charts, the stock has formed a robust breakout continuation pattern which suggests uptrend momentum is likely to persist in the near future.

However, on a short-term time frame, the momentum indicators indicate that the stock is in an overbought zone and the uptrend would be vulnerable if it closes below the Rs 2,000 mark.

For swing traders, Rs 2,000 should be the trend decider level. We can expect further uptrend up to Rs 2,800-3,000 as long as it trades above Rs 2,000 levels. However, a close below the said levels, would push traders to exit out from their trading long positions.

Caplin Point: Rs 575 should be the sacrosanct level for the bulls

On August 06, the stock made another 52-weeks high of Rs 629.85. In this month alone, the stock has rallied by about 55 percent. The important point to note is that the stock has not only surpassed its previous 52-week high of Rs 467 but managed to sustain above the same.

Post breakout, the sharp surge in the price surprised most of the traders as well as investors. On the daily and weekly charts, the stock has formed a breakout continuation pattern which is grossly positive for Caplin Point.

Nevertheless, on a short-term time frame, the momentum indicators indicate that the stock is in an overbought zone, and there are high chances of a quick short-term price correction if the stock trades below Rs 575.

For the next few trading session, Rs 575 should be the sacrosanct level for the bulls. If the stock manages to sustain above the same, we can expect a continuation of the uptrend up to Rs 680.

Further uptrend may also continue which could lift the stock towards Rs 735. On the flip side, a dismissal of Rs 575 could possibly trigger quick short-term correction up to Rs 515.

Aurobindo Pharma: Positional traders retain an optimistic stance

The stock has rallied nearly 12 percent this month. On August 6, 2020, Aurobindo Pharma made a fresh 52-weeks high of Rs 915, and after an extremely strong intraday session, the stock closed above Rs 890 resistance mark, which is broadly positive.

The stock has formed a strong price volume breakout pattern and the medium-term texture of the stock is vigorous. In addition, the short-term averages and SAR series indicate high chances of the further uptrend from current levels.

Unless it trades below Rs 840, positional traders can retain an optimistic stance and look for a target Rs 950-975. Fresh buying can be considered now and on dips if any between Rs 910-885 levels with a stop loss below Rs 840.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark