The pharma company with a market capitalisation of more than Rs 74,000 crore hit a 52-week high of Rs 1,083 on March 15, 2022, and since then the stock went sideways.
The stock hit a low of Rs 904 earlier this week before recovering marginally. The stock has been under pressure in the short term. It fell nearly 3 per cent in a week, and more than 10 per cent in a month, data from Trendlyne showed.
The stock is now trading near the potential reversal zone of a bullish harmonic BAT pattern on daily charts. The BAT pattern is a 5-point retracement structure that was discovered by Scott Carney in 2001.
It has specific Fibonacci measurements for each point within its structure and it is important to note that D is not a point, but rather a zone in which price is likely to reverse, called the potential reversal zone (PRZ), Anand Rathi Shares and Stock Brokers said in a note.
The B point retracement of the primary XA leg must be less than a 0.618, preferably a 0.50 or 0.382 and the PRZ consists of 3 converging harmonic levels: 1) 0.886 retracement of the primary XA leg, 2) extended AB=CD pattern, usually 1.27 AB=CD and 3) minimum BC projection is 1.618, the note added.
Cipla, the third-largest pharma company in India, and it is present in more than 80 countries providing over 1,500 products across various therapeutic categories in 50+ dosage forms.
The Q4 and FY22 results of Cipla highlighted continued momentum across key markets which aided 14 per cent revenue growth. The core profitability maintains a strong trajectory, Trendlyne showed.
US business reported $160Mn in revenue and 17 per cent YoY growth; strong traction in respiratory assets as well as a contribution from peptide assets.
It is trading well below crucial short- and long-term moving averages of 5,10,20,50,100 and 200-DMA which is negative for the bulls.
“The stock along with its peers have been in a corrective mode for the past couple of months. During the process; it has corrected from the top of Rs 1,080 towards the recent low of Rs 900,” Mehul Kothari – AVP – Technical Research, Anand Rathi Shares and Stock Brokers, said.
“At this point in time, it is trading near the potential reversal zone of a bullish harmonic BAT pattern. In addition, the stock is very much near to its previous demand zone as displayed on the chart,” he said.
Kothari further added that the above-mentioned technical rationale indicates that the stock is poised for a pullback. “Hence; traders are advised to accumulate the stock in the range of Rs 920-900 with a stop loss of Rs 860 for an upside target of Rs 980-1,000 in the coming 3-5 weeks,” he recommends.
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