Technical Stock Pick: Should you buy this FY24 multibagger pharma stock after recent dip?

Aurobindo Pharma's stock, after a 100% rally in FY24, faced resistance but is now showing signs of bottoming out. Experts suggest a possible rise above Rs 1,300 for short-term traders.

, part of the pharma space, has rallied more than 100% in FY24 but found some resistance above Rs 1,100 levels in January 2024.

The stock underwent price wise correction since January 2024 and is now showing signs of bottoming out which suggests that bulls are ready to take the charge again.

Short-term traders can look to buy the stock now for a possible target above Rs 1,300 levels in the next 3-4 weeks, suggest experts.

The pharma stock rose from Rs 518 recorded on March 31, 2023, to Rs 1,112 as on 1st April 2024 which translaates into a rise of more than 114%.

Tracking the momentum, the stock hit a record high of Rs 1,177 on 30th January 2024, but it failed to hold on to the momentum.

The stock witnessed a mild selloff but managed to find support above Rs 1,000 levels in February and then again in March 2024 which resulted in a double bottom formation on the weekly charts.

In terms of price action, the stock is trading above crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA on the daily charts which is a positive sign for the bulls.

The daily Relative Strength Index (RSI) is at 64.4. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is above its center and signal line, this is a bullish indicator.

“Aurobindo Pharma has maintained a robust price structure, displaying a clear uptrend since February 2023, characterized by consistent higher highs and higher lows,” Vidnyan S Sawant, Head of Research, GEPL Capital, said.

“After a healthy retracement from January 2024 following a sharp upward move, the stock has found support on the 26-week exponential moving average, suggesting a mean reversion scenario,” he said.

“Additionally, a change of polarity has been observed, where the resistance of May 2021 now acts as a strong support, signaling a continuation of the upward momentum,” highlighted Sawant.

“On the daily scale, the stock has formed a double bottom formation, indicating alignment between lower and higher timeframes for an upward trajectory,” recommended Sawant.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

Source: Stocks-Markets-Economic Times