Nifty Pharma index surpasses 200-DMA; Cipla, Granules can soar up to 15%

The Pharma benchmark has outperformed the overall market in recent trading sessions; sustenance above 200-DMA is likely to trigger further gains for it

The Nifty Pharma index leaped over the 200-day moving average (DMA) on Monday for the first-time since this April. The inability to carry forward the buying momentum in that month had led the Pharma index to decline to a fresh 52-week low of 11,726 in June.

Last week, the NSE Pharma index soared 2.85 per cent and was one of the top performers in an otherwise weak market. In comparison, the benchmark indices, the BSE Sensex and Nifty 50 negated the double top formation in late September, and shed around 1.3 per cent each.

The Pharma index has carried forward its momentum into the current week, and so far gained 1.5 per cent. Meanwhile, the benchmark indices too are up around 0.7 per cent.

On a broader outlook, the Nifty Pharma is still down 7.35 per cent on a year to date (YTD) basis, after surging 10 per cent and 60 per cent in 2021 and 2020, respectively.

This is the third attempt of the Nifty Pharma index to scale its 200-DMA this year, and if the index manages to sustain over the same, technically, it may perform better in later months.

To ascertain the next move, here’s the technical outlook of Nifty Pharma index and select stocks:-
 

Nifty Pharma

Outlook: 200-DMA breakout stares at 6.50% upside to 14,000

Whenever a stock or underlying conquers its 200-day moving average (DMA), technical readings indicate a turnaround scenario with price action supporting a bullish bias. And so is the case with the Nifty Pharma index. The 200-DMA, placed at the 13,000 mark, was conquered on Monday.

Moreover, the index took off the trendline hurdle placed at 13,100 with decent volumes, shows the weekly chart. Thus, indicating a strong upward bias that could see 14,000-level, provided the index manages to sustain over 12,800. CLICK HERE FOR THE CHART

Sun Pharmaceutical Industries Ltd (SUNPHARMA) 

Outlook: More 10% upside cannot be ruled out

Shares of Sun Pharmaceutical Industries were registering new 52-week highs since last week with price action supportive of further up move, as per the daily chart. The Moving Average Convergence Divergence (MACD), a technical momentum indicator, is reluctant to dip beneath the zero line reflecting a robust underlying bias. The support for the stock exists at Rs 920 and Rs 880 levels with overall structure denoting the price move to Rs 1,050.  CLICK HERE FOR THE CHART

Torrent Pharmaceuticals Ltd (TORNTPHARM)

Outlook: Honours 200-DMA,  could rally to Rs 1,800

With an intraday high of Rs 1,605 mark on Tuesday, the Torrent Pharmaceuticals shares were just 0.55 per cent shy of recording a new historic peak.

Thus far, the trend is buoyant with stock breaking out of “Double Bottom” formation on the 200-DMA mark, currently set at Rs 1,435 and subsequently honouring the relevance of the moving average. A push toward a new high with a moving average and MACD, a price indicator and technical indicator respectively, suggests bulls have a firm hold on the stock. The overall boldness points at the 1,800 level. CLICK HERE FOR THE CHART

Cipla Ltd (CIPLA)

Outlook: 15% upside likely on a gradual scale

Cipla stock has soared 21 per cent so far this year and has outperformed among the Pharma index constituents. The stock is riding higher grounds gradually with volumes staying decent. This scenario indicates price strength drives the stock, rather than market participation. Immediate cushion for the stock is seen at Rs 1,050 and Rs 1,000 with price expected to ascend towards Rs 1,350. CLICK HERE FOR THE CHART

Granules India Ltd (GRANULES)

Outlook: Golden cross pattern senses 15% ascent

Shares of Granules India massively broke out of Rs 330 mark, which was the hurdle the stock faced after losing 200-DMA in January this year. In addition, there is a “Golden Cross” breakout on the daily chart. This illuminates the prospects of a robust bias. The next hurdle comes at Rs 400. The 200-DMA is located at Rs 298.  CLICK HERE FOR THE CHART