Trendline Breakout: Bulls Keeping a Tab on This F&O Counter!
At the opening tick, the broader markets have taken a hit on account of new jitters from the Adani Group as MSCI’s quarterly rebalancing might result in a cut in the weightage of the group companies.
In the midst of weak market sentiments, the only sector that is trading in the green zone is the index which is up only 0.09% to 12,375, by 9:45 AM IST. Going with the sector that is showing a relatively better strength, the share price of IPCA Laboratories Ltd. (NS:) is coming on investors’ radar.
It is a pharmaceutical company with a market capitalization of INR 21,979 crores and currently trades at a P/E ratio of 24.59, compared to the sector’s average of 34.04. FIIs have notched up their stake a bit in the December 2022 quarter to 10.78%, from 10.57% in the preceding quarter.
Image Description: Daily chart of IPCA Laboratories with volume bars at the bottom
Image Source: Investing.com
On the technical front, IPCA Laboratories shares seem to be changing their trend toward the upside after showing a consistent downtrend since mid-September 2021. In today’s session, the stock surged past the falling trendline resistance on the daily chart, giving an early indication of a change in the demand-supply equation which is favoring bulls. It is too early to gauge volume figures as it’s not been even an hour of trading yet, so the volume needs to be watched out for before making an investment decision.
Currently, the stock is trading 1.32% up at INR 877.75 and has the potential to surge to an immediate hurdle of INR 904, which is the high of 9 December 2022 (spot). As the market is still rattled by a fresh selling spree in Adani Group companies, tight risk management is highly recommended in any position.
Also, the volatility of this counter is quite low, only 1.44x more than the bluechip index, therefore the move on the upside might take some time and a very sharp rally should not be expected. There is good support around INR 844 which can be used as an exit level in case the tide turns. As long as the stock is trading above the falling trendline, short positions are at a good risk.
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