The stocks from the pharmaceutical sector have been performing well recently. Be it the large cap ones such as Divis Lab or Lupin or the small and mid cap ones such as Dishman, Aurobindo Pharma and Shasun, the entire sector has been an outperfomer. We take a look at Dr.Reddy’s Lab which has completed a correction and looks set to resume its uptrend.
From the weekly chart featured above, it is clear that the stock has respected the red set of trendlines. The stock has settled comfortably above the upper red line and we now expect the uptrend to continue to the centre line of the blue pitchfork at Rs.2,700+.
The positive view would be invalidated if Dr.Reddy’s Lab falls below Rs.2,390. Investors may use a SIP-kind of approach to accumulate this stock. Beyond Rs.2,700, we would expect the stock to proceed to Rs.2,850-2,900.
As always, patience is the key requirement in profiting from such medium to long term recommendations. Do not expect fireworks similar to the small and mid cap stocks. A steady upward progression is what we anticipate.
(The view featured here is based on Technical Analysis of historical stock price action. Please read the Disclaimer)