The Indian pharmaceutical sector is experiencing significant growth and transformation, moving beyond generic drugs towards innovation and globalisation. With a robust run seen in this space lately and the strong surge in pharma names in the last few weeks, we are covering some names that are holding some promise.
Here are three stocks to trade as recommended by Raja Venkatraman for Monday, 16 June
Buy MAXHEALTH (Current price ₹1232.80)
- Why MAXHEALTH is recommended: Steady rise seen in this counter to the upside, as shown on the charts, coupled with steady buying interest at every decline, has pushed the prices ahead. Ahead of the results, the prices have pushed beyond the median line, which spells well for the counter. The pharma sector is continuing to witness steady buying interest that is driving the trends upward. The RSI is continuing to push for more upside and can be considered as a continuation of positive signs of resumption.
- Key metrics: P/E: 43.53; 52-week high: ₹98.20; Volume: 1.60 M
- Technical analysis: Support at ₹1125, resistance at ₹1400.
- Risk factors:Regulatory changes, intellectual property issues, competition from generic drugs, supply chain disruptions, and cybersecurity threats.
- Buy: CMP and dips to ₹1210.
- Target price: ₹1300-1325 in 1 month.
- Stop loss: ₹1195.
Buy BIOCON (Current price ₹355.40)
- Why Biocon is recommended: This counter has managed to hold on to key support zones around ₹350 and the prices quickly revived above the near-term support zone to head strongly higher in the latter half of the week. We can observe that there are sizeable volumes building up suggesting that the prices could now travel to the next resistance zone around 380. The demand at lower levels and a nice long body bullish candle does suggest more upside in the coming sessions.
- Key metrics: P/E: 70.04; 52-week high: ₹404.60; Volume: 8.01M
- Technical analysis: Support at ₹310, resistance at ₹425.
- Risk factors: Regulatory changes, intellectual property issues, competition from generic drugs, supply chain disruptions, and cybersecurity threats.
- Buy: CMP and dips to ₹341.
- Target price: ₹385-398 in 1 month.
- Stop loss: ₹332.
Buy STAR (Current price ₹882.45)
- Why STAR is recommended: STAR is showing some steady progress and the periodic higher high higher low formation is indicating that the trends are firmly hinting at some potential upside in the coming days. The strong long body candle seen on Friday with a positive crossover as per Ichimoku TS & KS lines are hinting at possible upward drift.
- Key metrics: P/E: 40.34; 52-week high: ₹647.65; Volume: 737.47 K
- Technical analysis: Support at ₹700, resistance at ₹1250.
- Risk factors: Regulatory changes, intellectual property issues, competition from generic drugs, supply chain disruptions, and cybersecurity threats
- Buy: CMP and dips to ₹833.
- Target price: ₹970-1035 in 1 month.
- Stop loss: ₹820.
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Outlook for Trading
Most of the sectors ended the week in red with Realty, FMCG and PSU Banks leading the way down. The Bank Nifty has not been so strong after the breakout and has actually met with some selling, thereby keeping the pressure on the Nifty too. Fortunately, there has been good activity form the IT index and it is seen heading towards its highs, and this has contributed to some gains in the Nifty as IT majors are well weighted on the main index too.
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The gap left on the move down on 13 June continues to remain and that keeps a lid on the bullish flag. From the chart above we can see that the trends are down into some strong supports yet again. The dips into the previous supports at 24500 remain an important value support region that can now be considered as an inflexion point going into the coming days. Looking at the Open Interest data, the Put writing at 24500 continued to hold on with the PCR just below 1 highlighting that the bullish camp has more work to do.
Markets continued to see uncertainty with no clear global or domestic cues. As a result, we are now in the dark of the outcome of the trends in the coming week. We are likely to witness a volatile scenario in the coming week.
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IT sector leads from the front as the strong showing midcap IT stocks have been faring better than the leaders. The strong move seen in majority of the IT stocks clearly suggests that the upward traction we can look for some continued upward traction in the coming days.
The strong charge above resistance zones around 37500 has clearly signalled a new wave in this index. Until these zones are given up, this index and its component stocks will be in demand. Overall, markets are pointing to a bullish setup, and this can help fuel more upside in this index. Since no signs of a let-up in the trends, we can continue to look for every opportunity to initiate long position.
Raja Venkatraman is the co-founder of NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.
Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
