Why is the Pharma index taking off ? Get ahead

Published: Fri, 09/18/20

Dear ,

Everyone is buzzing About why all the Pharma stocks moved today. But no trend occurs in isolation. Neither did it start yesterday. I wrote about the Healthcare index 2 weeks ago as it was starting a new sub wave and momentum indicators confirmed. Some of the stocks covered are listed below in the articles I published. In the short term if you keep your stock list on a momentum filter you will be up to date on all the signals that it gives in advance. But to decide which stocks you should have in the list is important. The pharma sector index in March reached the lower end of a 4 year falling channel and I took the opportunity to write about it. I said that if a long term bottom was to occur this is the ideal level at the lower end of the channel. In the next one month the Healthcare index rallied and broke out of the channel, with a 50% advance. That marked the reversal from a bear market to a new bull market for the sector

Since that day stocks in the sector are on my radar for but short term and long term. That is the way it goes. however to expect 50% moves every month will also be wrong. Now on all you need is a slow progression of a trend. A trend as defined by higher highs and higher lows. That is it and this sector has the pattern so far.

Rohit Srivastava

The Truth About the Markets

The chart below is the BSE Healthcare index followed by my recent stock updates to Indiacharts Insiders.

This Sunday we are doing a special Insiders Webinar to discuss the recent Long short report and understand the state of the markets and winners for the next one month. Join in.

Dr Reddy

Dr reddy pulled back to below the 40dema and just above the previous high of 4189. From there we bounced back above the green 40dema. Si we cab try and estimate that wave 2 mabye complete and if so from that low 3=1 is at 5250. We made a low of 4233.

Torrent Pharma

The daily momentum is attempting to cross over to the buy side today. A move above 2838 would confirm minor wave iii of 3 up. Wave 3 itself can retest the high of wave 1 at 3035 and above that 3=1 is at 3580. Wave 2 was a zig-zag in a clear A-B-C down to 2632

Cipla

Cipla is crossing the falling trendline for wave IV of 3 and should then be starting wave V of 3 up. It may close above the 20dma at 738, an additional sign of strength and push the daily momentum into buy mode at the end of the day. WAve V up can subdivide or achieve the fractal end point near 1000 in a single wave, where 3=1, either case is open.

Biocon

In my April post I discussed wave 5 of Biocon on the long term channels going up to 600 odd. Now we can look at the breakdown. The March low was wave II of 5 and from there we started wave III up. Either wave III ended in July or only wave I of III ended in July. Both ideas have different implications. The first fractal would lead us to ending this move closer to 570 near the top end of the channel. The second case in blue though shows that wave 3 of 3 can go as far as 715 if equal to the first wave. The end result will also be a function of the Pharma sector that is now in overdrive. So lets see where the next 5 wave move ends. 410 is the near term support from the 20/40 day average on this daily chart below.

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Rohit Srivastava
www.indiacharts.com
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