The stock of Aurobindo Pharma almost gained 3 per cent with good volume on Tuesday, rebounding from a key support at around ₹582. Investors with a short-term view can buy the stock at current levels. Since encountering a key resistance at ₹838 in late April 2019, the stock has been in a medium-term downtrend. While trending down, the stock had breached a key support at ₹750 and ₹700 and continued to trend down. But the stock found support in the band between ₹575 and ₹585 in late June.

After testing this support, the stock reversed higher recently. The daily relative strength index as well as price rate of change indicators are displaying positive divergence implying possibility of a trend reversal. Also, the daily RSI has entered the neutral region from the bearish zone and the weekly RSI is likely to recover from the oversold territory. The daily price rate of change indicator has entered the positive terrain indicating buying interest.

Taking a contrarian stance, the short-term outlook is bullish for the stock. It can continue to trend upwards and reach the price targets of ₹628 and ₹640 in the ensuing trading session. Traders can buy the stock with a stop-loss at ₹592.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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