Sunpharma...heading towards 650...
Sunpharma...a world's 5th largest pharma company and off-course, India's largest pharma company's stock is heading towards 650...Today's close on NSE was 725.85...
The stock achieved high of 1200 in the month of Arpil, 2015. Since then it was trading in red till June, 2015. But from June to November 2015, the stock traded in the range of 800 to 970 - broadly speaking.
But on 9th November, it was opened gap down at 761. The previous day close was 803.4. Hence, the difference was of 42.4 Rs and 5.27%. The close on the day was at 756.96. The next day was more worse...Again gap down opening at 753.1 and closing 731.95. The difference was 25 Rs and 3.3%. Total 71.45 Rs was curtailed in just 2 days. The loss in percentage was 8.89% approximate.
It was said that this may be the last point of down move for such a huge and potential company. The price may start up move now and the worst is over. The traders using only price as a parameter and not considering any other technical parameters started thinking that this is a buying time in Sunpharma. Nothing more worse will happen.
For next 6 trading sessions, the belief of such "only price based traders" were strengthened as the price was not breaking the close of 10/11/2015 @ 731.95.
But today, even the market was bullish for most of the trading time, the stock didn't show any sign of sustaining or reversing in upward direction. The counter opened with minor gap down again at 739.80 and touching a high of 741 (Which was below even the close of yeaterday) and then going down up to 723.90 and ultimately closing at 725.85..
The closing of today posted on the charts created a red candle which breaks the close of 10th November 2015, which was at 731.95. The volume recorded was also higher then last 7 trading sessions.
All the major indicators like moving averages, MACD, Stochastic, Supertrend indicates the downfall of the stock. No indication of revival is seen on the charts in this counter.
The only factor that can prevent the down move of this counter in shorter term is the tendency of the counter to fill the gaps on the chart. This is a daily candle chart study. We can see in the last 8 months, there were 3 gap down openings recorded on the chart.
Each time the price move in reverse direction to fill the gap. But immediately it started a fresh down move every time. The fourth and last one was recorded on 9th of this month.
If the stock follow the pattern of filling the gaps, it can go back up to 800 in reverse direction and then continue to move in down direction.
If a trader want to trade in this counter as said here, he or she might have to keep the stop loss of 815 in mind. But practically it is too deep and may not be possible for most of the trader to execute this trade at this RR ratio as the short position can be made in future market only and huge margins are required to sustain the trade if it really goes back to the said level of 815.
Still, we suggest selling the stock with stop loss at 760 and first target of 670 from here. If the stock is opened below or at today's closing, then it can be the entry point for the stock. The second target estimated is at 600 and third target may be around 550. The stock can be traded with trailing stop loss strategy to make maximum profits out of the trade...
In fact, our SmartTrader+ software has already generated Fresh Sell Call on the chart on 19th November, 2015. To see the other calls, user can register on our site http://www.nsedata.com and avail free trial...
Happy Trading...Trend is Friend...
- Anand Singh Gaur
- Sunil Kothari