D-Street Buzz: Pharma stocks rally led by Divis Labs, Cipla; Lupin, Sun Pharma gain 3% each

The Indian stock market has shown some handsome gains on August 10 with Sensex up 352.04 points or 0.93 percent at 38392.61, and the Nifty jumped 112.20 points or 1 percent at 11326.20.

Among the sectors, the pharma index surged over 5 percent led by Cipla which jumped over 8 percent after the company reported a 26.6 percent year-on-year growth in its Q1 FY21 consolidated profit at Rs 566 crore, backed by strong performance by India, emerging markets and Europe geographies and robust operating margin.

Morgan Stanley remains overweight on the stock with target at Rs 847 per share, while Citi has upgraded the stock to buy with target of Rs 860 per share, according to a report by CNBC-TV18.

The stock was one of the most active stocks on NSE in terms of volumes with 2,31,52,680 shares being traded on NSE.

Stock price of Divis Laboratories spiked over 13 percent after the pharma company reported 80.61 percent rise in consolidated net profit at Rs 492.06 crore for June quarter 2020 mainly on account of robust sales. It logged a profit of Rs 272.44 crore in the year-ago same period, Divi's Laboratories said in a filing to BSE.

The company market capitalisation stood at Rs 84,263.71. It was one of the most active stock on NSE in terms of value with 30,21,339 shares being traded.

The other gainers included Lupin which gained over 5 percent followed by Sun Pharma ( up 3 percent), Dr Reddy's Labs ( 3 percent), Biocon, Cadila Healthcare and Aurobindo Pharma among others.

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities is of the veiw that Aurobindo Pharma 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.

Rohan Patil, technical analyst at Bonanza Portfolio has a buy recommendation on Sun Pharmaceutical Industries with target price at Rs 578. On the weekly chart, Sun pharma has given a breakout of the consolidation pattern, sustaining above all its major exponential moving averages. A bullish candle formed on the weekly candle has closed above its previous several weeks high, he said.

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