Lupin - Technical Note

After forming an interim top at Rs908, the stock has undergone decent pricewise as well as time‐wise correction.

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs880, Target price Rs1,030, Upside 17%

Formulating a breakout

The stock had been in uptrend since March 2013 as it carved out a sharp rally from the low of Rs568 to a peak of Rs908. After a period of exuberance, the stock witnessed a typical “shakeout trade”, where in, the stock corrected and retraced back to 50% of the entire rally from the low of March to the peak of Rs908. The retracement support co-incided with its 100-DMA and the stock resumed its prior trend. 

Set for an Inverted Head & Shoulders pattern

Since creating a base at Rs742, the stock rallied but found resistance at higher levels. After this consolidation phase of last 4 months, the stock is now attempting to complete an Inverted Head & Shoulders pattern. Generally, it is considered a major reversal pattern. However, there are occasions when an Inverted Head & Shoulders can be found as part of a continuation phase. Currently the stock stands on the verge of breaking out its neckline.

Strength in momentum oscillators

Also note that the RSI in the daily chart is trading well above 50. If the RSI reading rises above 60, the stock is likely to witness a strong upmove in the context of a reversal.

Bullish Structure

The upmove in the recent weeks has been accompanied with the rising 20 and 100-DEMAs, along with a rising 200-DEMA, suggesting bullish structure as long as the price sustains above Rs840.

Compelling buy at current levels

After forming an interim top at Rs908, the stock has undergone decent price-wise as well as time-wise correction. It has regained ground above its 50-DMA. With confirming signals from volumes, moving average and bullish chart structure, the stage is set for the stock to surge from the current levels. Buy above Rs880 for a medium term target of Rs1,030 with stop loss of Rs820. 

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