Technical Analysis

Natco Pharma (₹786.8)

Yoganand D BL Research Bureau | Updated on March 15, 2018 Published on March 15, 2018

Investors with a short-term perspective can consider buying the stock of Natco Pharma at current levels. The stock encountered a key medium-term term resistance at around ₹1,050 in mid-January 2018 and began to decline. This down move was sharp and the stock breached the key supports at ₹900 and ₹800 levels while trending down. However, the stock found support at the significant medium-term base level of ₹700 last week.

Triggered by positive divergence in the daily relative strength index and price rate of change indicator, the stock changed direction. The stock has gained 9 per cent so far this week and has surpassed its 21-DMA resistance. Moreover, the stock has formed a bullish engulfing candlestick pattern in the weekly chart indicating a potential short-term trend reversal.

The daily and weekly RSI have entered the neutral region from the bearish zone. Though there is a key resistance at ₹800, the stock has bullish momentum to breach it and trend higher. The short-term targets are ₹815 and ₹830. Traders can buy the stock with a stop-loss at ₹770.

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

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