Dr Reddy's, Divi's Lab, Torrent Pharma: What lies ahead for pharma stocks?

Except Sun Pharma and Lupin, others have grown significantly and are showing less reversal signals.

Most pharma companies have underperformed the benchmark indices in the past one year. Barring Divi's Labs (up over 32 per cent) and Dr Reddy's (up 29 per cent), rest of the pharma stocks from the Nifty Pharma index have given negative returns in the last one year as compared to nearly 13 per cent gain in the Nifty50 index (as of Friday's close). 

Here's how to trade pharma stocks going ahead - 

Dr. Reddy's Laboratories Ltd (DRREDDY): As the counter shows stability above Rs 3,000 levels, which was the major resistance on the monthly chart, the overall trend looks optimistic and a rally towards Rs 3,500 is in progress. The immediate support comes in Rs 3,240 and Rs 3,100 levels. The stock is trading well above all the daily moving averages (DMA), including 50-DMA, 100-DMA and 200-DMA.  Also, a positive crossover of 50-weekly moving average (WMA) with 200-WMA further adds to the positive sentiment. CLICK HERE FOR THE CHART
 
Torrent Pharmaceuticals Ltd (TORNTPHARM): The counter is rising with “Higher High, Higher Low” formation as per the weekly chart. Till the said formation holds the lower rising trend line (low), the bullishness may see Rs 2,350 levels. The support remains at Rs 1,980 levels. The counter has crossed significant resistance of Rs 1,950 levels. CLICK HERE FOR THE CHART
 
Sun Pharmaceutical Industries Ltd (SUNPHARMA): It is witnessing selling pressure on every rise. The breakdown below the Rs 400 level, which is the immediate support, may turn this counter in a bearish phase. A negative crossover of 50-DMA and 100-DMA with 200-DMA has reduced the upside potentials. Only above Rs 450, this counter may see buying getting generated.  Both the indicators, RSI and Moving Average Convergence Divergence (MACD) have been trading in negative crossover, a signal of weak trend. CLICK HERE FOR THE CHART
 
Divi's Laboratories Ltd (DIVISLAB): In the last six months, the counter has seen a massive surge of 35 per cent and continues to rise upward. The Relative Strength Index (RSI), which is currently trading in an overbought condition, is not showing any weakness in the price. That said, one needs to be cautious if the counter breaks the support of Rs 2,080 levels. CLICK HERE FOR THE CHART
 
Lupin Ltd (LUPIN): The “Falling Channel” pattern in the daily chart shows resistance around Rs 735 levels. However, RSI and MACD are showing positive crossovers which indicate upside strength. One can see a buying support around Rs 700 on closing basis, and if this level is held then the positive upside may sustain. CLICK HERE FOR THE CHART