The outlook for the stock of Sun Pharmaceutical Industries is bullish. The stock surged 6.9 per cent on Wednesday and has closed on a strong note. This strong rally has taken the stock well above the 200-day moving average at ₹561 and a trendline resistance at ₹564. These two levels may now serve as a good short-term support. Additionally, the decisive break above ₹564 confirms an inverted head and shoulder pattern on the chart. This is a bullish reversal pattern. So, intermediate dips to ₹564 and ₹561 is more likely to find fresh buyers coming into the market.

A rally to ₹600 and ₹620 looks likely in the coming days. Short-term traders can go long at current levels and also accumulate on dips at ₹570 and ₹565. Stop-loss can be placed at ₹555 for the target of ₹615. Revise the stop-loss higher to ₹585 as soon as the stock moves up to ₹600. The bullish outlook will get negated only if the stock declines below ₹561 decisively. In such a scenario, the stock can move down towards ₹540, ₹530 or even lower levels thereafter. However, such a fall breaking below ₹561 looks less probable at the moment.

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

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