The Nifty Pharma index faces resistance around 200-weighted moving average (WMA) and is consistently trading below April 2017 levels. Its attempt to conquer the level failed as technical indicators entered in overbought region as per the weekly chart. The daily chart indicates trend line resistance on every new rise, coinciding with earlier significant support levels now becoming resistance.
Here’s a look at how the index and three pharma stocks are likely to perform in the near future -
NIFTY PHARMA: The immediate support for the index comes at a recent low of 8,417, before the next support of 8,270. In another scenario, a close below 8,500 and immediate breakdown on subsequent session could lead to 8,200 level, chart suggests. The index may trade around 8,500 as technical oscillator relative strength index (RSI) is trading at 38, near the oversold region of 30 level.
DIVI'S LAB: The year 2018 witnessed three pharma stocks scaling their lifetime high. They are Divi's Laboratories, Biocon and Piramal Enterprises (PEL). At present, Divi's Labs is trading nine per cent lower, Biocon 15 per cent and PEL is down 31 per cent from their respective lifetime highs. The Divi's Labs stock indicates increasing positive volumes as price has touched new highs, as per the quarterly chart. The weekly chart suggests "Higher highs, higher lows" formation with Rs 1,000 - Rs 960 range evolving as base for a bigger trend. Currently, the stock is trading around Rs 1,445, the 50-day moving average (DMA), as per the chart.
LUPIN: The stock is hovering around 200-DMA on the daily chart and is trading on either side of the average. The stock failed to provide decisive break out of the "Inverse Head and Shoulder" pattern on weekly chart. The level of Rs 780 stays as a strong support after recent low around Rs 800 level as per the daily chart. The view for the stock remains "conservative" as breakout still needs to be conquered.
GLENMARK: The weekly chart clearly indicates breakout in the "Inverse Head and Shoulder" pattern of the stock. The daily chart shows "Ascending Triangle" formation with neckline above Rs 700 level. The 50-DMA is placed at Rs 641 level with 100-DMA at Rs 631 level. The Moving Average Convergence and Divergence (MACD) with recent positive crossover is trading above zero line.