Pharma shares may turnaound soon; Cipla, Sun Pharma, Granules can gain 20%

What do expect from pharma stocks over the next few weeks? Here's what technical charts suggest.

After two successive years of gains, the Nifty Pharma index has been an underperformer so far in 2022. The index had rallied 60 per cent in 2020, and subsequently gained 10 per cent in 2021. So far in 2022, it has declined 7 per cent and treaded with a strong bearish bias in the first half of the calendar year. 

So, when will pharma stocks start to perform well or at least show signs of bottoming out?
 

Earlier this year, when the domestic indices, the BSE Sensex and Nifty 50 slipped to 52-week lows, dropping 18 per cent in June, the pharma index entered into a bear trend, falling over 21 per cent. Technically, any index that falls over 20 per cent is considered to be in a Bear phase.

At present, while the BSE Sensex and Nifty have smartly recovered, up 18 per cent each from their 52-week lows and trade merely 3 per cent away from their record highs, registered in last November, the pharma index is still 10 per cent far from its record peak, despite rising 14 per cent from the descent to 52-week low. 

The current technical formations on the Nifty Pharma index points to a turnaround texture provided the momentum is held resolutely. Select equities such as Cipla, which hit an all-time high last week, and Sun Pharmaceutical, Torrent Pharmaceuticals, and Granules India, that registered new 52-week highs, were also seen exhibiting a likely robust trend ahead. 

Here’s the technical outlook to understand their future course:-

Nifty Pharma

Likely target: 14,000

Upside potential:  4%

After recording a historic peak in November last year, the index failed to gather further up move. This prompted bears to seize the opportunity, lightening the strength and momentum. Following this, the index fell dramatically, with every reversal witnessing aggressive sell-off. 

In early October, the index succeeded in over-turning the selling pressure and held its ground despite broader market uncertainities, thus exhibiting positive strength over the bearish grip. Thus, until the index does not fall beneath 13,000-mark on a weekly basis, the upward bias seems headed towards the Rs 14,000 level.  CLICK HERE FOR THE CHART

Cipla Ltd (CIPLA)

Likely target: Rs 1,350

Upside potential:  15%

Shares of Cipla shares have delivered whopping returns to investors, having tripled from lows of Rs 351 in the Covid-19 era. The chart texture is sturdy, with the price action annihilating every sell-offs. The recent breakout over the barrier of Rs 1,050-level, has opened doors into the uncharted territory from a medium-term perspective, hints the weekly chart. 

There is a gap-up close on the weekly set-up indicating the selling pressure failed to overpower bulls. Following this, the stock price rose steadily demonstrating an immense hold of the bullish bias. The next reach on the chart signals Rs 1,350 level. CLICK HERE FOR THE CHART

Sun Pharmaceutical Industries Ltd (SUNPHARMA) 

Likely target: Rs 1,250

Upside potential:  20%

Shares of Sun Pharmaceutical Industries are Rs 28 shy from its historic peak.  As and when this occurs, the stock would enter a new era of bullishness, resuming the upward trend it left in 2015. For now, as long as the cushion of Rs 950 is confidently held, the medium-term outlook seems poised for a rally to Rs 1,250. Moreover, if the counter adds volumes in the near term, the optimism may see a turnaround scenario in the coming years. CLICK HERE FOR THE CHART

Granules India Ltd (GRANULES)

Likely target: Rs 415

Upside potential:  11%

There was a trendline barrier at Rs 350 on the weekly chart of Granules India, which was firmly taken off in the October. Following this robust momentum, the counter further went to breakout on the “Flag” pattern, as per the daily chart. The current drive in the stock is resilient, with the price action enlightening further advances to Rs 415. The immediate support level is Rs 360.CLICK HERE FOR THE CHART

Torrent Pharmaceuticals Ltd (TORNTPHARM)

Likely target: Rs 2,050

Upside potential:  20%

The weekly breakout and subsequent crossing of the Rs 1,625 hurdle, has helped the Torrent Pharmaceuticals stock enter a bull pharse. The counter now seems set to rally another 20 per cent in the medium-term to Rs 2,050 level. The immediate support for the stock is seen at Rs 1,550 mark. Crossing of Rs 1,625 for the first time since mid-December 2021 also aims at short-covering. This could even push the stock price to elevated levels in the short-time. CLICK HERE FOR THE CHART