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Glenmark and Lupin: Are pharma stocks a good contrarian bet?

Pharma Stocks
Thus far in the calendar year 2019 (CY19), most pharma stocks have underperformed the market by falling up to 59 per cent. Barring Divi's Laboratories (up 16 per cent) and Dr. Reddys Laboratories (up over 3 per cent), all the other scrips in Nifty Pharma index have been under pressure.

Glenmark Pharmaceuticals have slipped the most - 59 per cent while Piramal Enterprises and Aurobindo Pharma come second and third on the list of declines. In comparision, the Nifty Pharma index has slipped nearly 16 per cent while the Nifty50 index has gained over 5.54 per cent. 

NIFTY PHARMA: The “Hammer “candlestick on the weekly chart shows a reversal; however, till the pharma index does not cross 7,700 level, this opportunity may be utilised for going short. Given the scenario wherein Relative Strength Index (RSI) is turning up nearing oversold region, the bullish bias still prevails above a successful close at 7,700. One also needs to note that the hammer formation is of a negative candle (Red), which still reflects the existence of selling pressure. Furthermore, its low of 7,047 becomes the immediate support.  CLICK HERE FOR  THE CHART

 

Aurobindo Pharma (AUROPHARMA): A sharp fall of over 15 per cent in a day has disrupted the upside momentum this counter was carrying from September this year. Now, as all the technical indicators are positioned in their respective oversold territories, the up move seems getting delayed as price momentum have slowed down. The range of Rs 470 – Rs 490 is becoming strong pressure range and unless this is being conquered, the beginning of an upside seems unsecured. On the other hand, Rs 430 – Rs 440 stay as support range. If broken, the scrip can even dip below 2015 levels of Rs 406. CLICK HERE FOR  THE CHART 

 

Glenmark Pharmaceuticals  (GLENMARK): This counter is continuously going down from Rs 600 levels and is not showing any sign of recovery. A sharp fall has eroded half of the price in just 5 months. Adding to this are the gap-down closing, that has worsened the impact severely. Here onwards, if Rs 315 is not conquered, then this formation may see a dip towards Rs 250 and Rs 220 levels in the near future. CLICK HERE FOR  THE CHART 

 

Lupin Ltd (LUPIN): The stock is facing strong resistance above Rs 800 levels, the current upside may see further rise; however, crossing Rs 800 seems a very difficult task. The 200-day moving average (DMA) is at Rs 774, which is also a resistance after Rs 740 which is its100-DMA. On the other hand, the moment this counter closes below Rs 710, the selling pressure may accelerate, breaching the previous low of Rs 646, as per the daily chart. CLICK HERE FOR  THE CHART 



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