Delivery Picks Newsletter

Sun Pharmaceuticals (538): BUY

This pharmaceutical company has been through a major rough phase in which it lost around 2/3rd of the total gains from the low of 2009 thru the high of early 2015. Its uptrend, which at one point of time appeared almost invincible suffered a sustained reversal ever since the Ranbaxy acquisition was done. Almost 70% of the total gain in six years was wiped out through a little-over two-and-a-half year-old downtrend. But that’s exactly the point. Now, it has become quite attractive from a technical point of view.

With positive divergences clearly visible on the end-of-day price chart and MACD and 14-RSI indicators, we can at least expect a pullback rally up to its 200-DEMA which is now placed at 586. It is a little over 10% gain. This calls for a short-term trade with a stop below 510 on closing price basis.

Our second pick is a mid-cap with a promising chart:


This stock, as the accompanying chart shows, is moving up after a considerable period of accumulation at the base levels—between 70 and 100 over the last few months. For the last two sessions, it has attracted a lot of buying interest. After the last attempt in July this year, it is making another attempt to get past this consolidation zone again. The oscillator readings—both the 14-RSI and the MACD—seem to suggest this could well be the time when it might just do it.

In any case, since we are buying at the base, we have pretty low risk and there is this probability of a potential sustained upmove that could be highly rewarding if it were to succeed. Our stop-loss is a close below its 200-DEMA, currently at 84.60 at the close. Those of you who want to buy it for the long term should place a stop below 68 on the close.

Its short term targets are 112 – 118 price levels, and its medium term target is 139. Long term target would be 180 or more. It’s worth a delivery trade for sure for the risk reward ratio is highly favorable over the medium to long term scenario.

Disclaimer: Both the above stocks are being recommended as a delivery based short to medium term trades. The recommendations are purely based on technical parameters as the accompanying texts clearly show. As a matter of abundant caution, you should maintain a stop-loss—either the ones suggested above or any money stop or any other type of stop-loss you want to use. Keeping a stop-loss for a trade is an essential mechanism for risk control and it should always be there. When you take the trade/s based on the above suggestions, you are doing it at your own risk.


Leave a Reply

Your email address will not be published. Required fields are marked *