Amit Gupta of ICICIdirect told CNBC-TV18, "There are few stocks from the pharma and healthcare space one can look at. Particularly Dr Reddy's Laboratories is one stock which one can look at because it is definitely witnessing the short covering in the market. It has already attempted Rs 3500 level, it came down to Rs 3300 and it is on the verge of giving a breakout above Rs 3500 in the coming sessions."
"The open interest fell from Rs 3670 just two or three months back when there was uncertainty in Ukraine and there were lot of problems with ruble, it fell almost by 18 percent towards Rs 3000 and it spent couple of months around Rs 3000 and then started moving up. So, in that fall around 85 percent of short additions was seen in the stock and out of which 25 percent has already been closed in last one month," he said.
"However, I still believe that there is enough headroom for short covering in Dr Reddy's Labs and that is why I am placing this bet with Nifty because even if Nifty moves little bit higher towards Rs 8820-8850, Dr Reddy's will give higher returns just because of the short covering. If Nifty starts sliding little bit towards 8700 or 8650 again then also it will give better returns because it is on a short-covering trend and it is from the defensive pack. So, overall the stock looks better in the short-term and that is why long Dr Reddy's and short Nifty trade can also be done."
"If you look at the healthcare stocks like Cadila Healthcare or Fortis Healthcare, they have performed better in the last one or two months. Apollo Hospitals Enterprises is one such stock which generally does not move with high momentum. It spends time and then eventually gives breakout and gives you money over the period. In last two or three months, consolidation is already over in the stock. It fell from Rs 1440 to Rs 1200 and found a base there. It already attempted in the initial part of March but that was a failed attempt. It came down towards Rs 1300 and now it is on the verge of breaking out above Rs 1440 again."
He further said, "This time it seems to be the breakout, simply because the open interest closure of around 20-25 percent that we have seen means that short covering is finally panning out. There is good volume and there is good delivery pickup in the stock in the recent period. So, there is a possibility of a breakout in Apollo Hospitals. Another Rs 100-140 of upmove can be seen, so I am targeting around Rs 1540-1550 in it."
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