Technical Analysis

Go long on Sun Pharma

KS Badri Narayanan | Updated on March 25, 2019 Published on March 25, 2019

Though the long-term trend remains weak for Sun Pharmaceutical Industries (₹473), in the short term, the stock may show some resilience. It finds immediate resistance at ₹525 and a major one at ₹597.

A close above the latter will even alter the medium-term outlook to positive and lift the stock to ₹621. Sun Pharma, however, finds immediate support at ₹430 and a close below that will reignite the downtrend for the stock.

F&O pointers: The Sun Pharma futures witnessed a rollover of 25 per cent to April series, which is quite healthy. .

Strategy: Expecting a bounce back, we suggest traders to go long on Sun Pharma April futures, which currently quotes at ₹475.50. While a stop-loss can be placed at ₹460, which can be shifted to ₹481 if the stock moves past that level. Traders should keep in mind that the market lot is 1,100 shares and this strategy involves huge margin commitments. Risk-averse traders can stay away from this strategy.

Traders can aim for an initial target of ₹498 or even ₹525, with a trailing stop loss. This position can be held for at least two weeks. Alternatively, they can consider buying ₹480-April call option on Sun Pharma that closed around ₹15. Traders should exit the position, if the premium dips to ₹8 or rises to ₹25.

Follow-up: The stock of Eicher Motors moved on expected lines and hit targets.

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