Chart Check: After 11% rally in a month, this pharma stock races to fresh 52-week high; time to buy or book profits?

Short term traders can hold on to the stock price for a possible target of Rs 890 levels in the next 6 months, suggest experts.

The stock rose from Rs 599 as on 5th May 2023 to Rs 664 recorded on 6th June 2023 which translates into an upside of about 11% in a month. The stock hit a fresh 52-week high of Rs 672 in intraday trade on 7th June.

On the monthly charts, the stock has formed a bullish candlestick pattern of three white soldiers, and on the weekly scale it has recovered quickly from the support level.

The recent price action pushed the stock to overbought levels; hence, some consolidation cannot be ruled out. But short-to-medium term traders can buy the dip.

The Relative Strength Index (RSI) is at 70.4. RSI above 70 is considered overbought. This implies that stock may show pullback, Trendlyne data showed. MACD is above its center and signal Line, this is a bullish indicator.

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In terms of price action, the stock is trading well above most of the short and long term moving averages of 5,10,30,50,100 and 200-DMA which is a positive sign for the bulls.

“A bullish engulfing candlestick pattern and above-average volume have helped the Aurobindo Pharma stock reclaim strong support on a monthly chart,” Suraj Bathija, Founder & CSO at AlgoBulls, said.

“In addition, the stock formed a bullish candlestick pattern of three white soldiers, indicating that it respected the support level and reversed its trend. It has also broken above the downward trendline,” he said.

“On the weekly chart, the stock has recovered quickly from the support level. The RSI is higher than 60 on a weekly basis. Since April 2023, the stock has outperformed the Nifty Pharma index and has continued to do so,” highlighted Bathija.

The stock closed in the green for the majority of the weeks from February 2023 to the end of May month. Additionally, on the daily time frame, the stock has closed above its upper Bollinger band and has taken support twice on its lower Bollinger band, indicating that the stock is resuming its uptrend after each pullback.

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“In a quarter to six-month period, the stock is expected to reach Rs 890, representing over 30% increase from its current price of Rs 663,” recommends Bathija.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)