Hello friends and welcome to today’s new Article! As the title of this article suggests, we will talk about some interesting patterns developing on different charts of one Pharma Stock, and scrutinize the charts closely, to identify and understand any probable reversal points, and ensure we catch them before our competition does for a better reward to risk ratio!
In our previous stock picks, we recommended stocks like IEX and Laurus Labs as potential picks at lower levels, and both stocks have been performing steadily since the time we picked them out.
This time around, we are observing similar evidences on another beaten down Pharma stock and that is Biocon. This Banglore-based pharmaceutical company has been under pressure all through 2021 and 2022 on the back of weak results, drug bottle recalls, and a removal from the Nifty 50 Index, just to name a few. However, as they say, the right time to buy a stock is when there is absolute panic in the markets. Stock prices tend to overreact both, on the upside, as well as on the downside, and so has been the case with Biocon. At the current price of Rs. 220, most of the negatives seem to have already been factored in, and there is a high probability that the stock would look up from this point.
While fundamentalist believe multiple near-term levers, enviable biosimilars pipeline, strengthening of leadership teams, favourable valuation and marquee investors backing Biocon, makes it an attractive pick from a medium to long-term perspective. Technically too, we have started seeing multiple signs of a reversal. Lets take a look at what the higher time frame charts for Biocon are looking like and why we like the stock.
Let’s look at Biocon on Monthly Time Frame Chart
On the monthly time frame charts, the RSI is extremely oversold and is dropping below 30 levels, while being deeply overstretched on the lower Bollinger Band. As around mid-April, the stock is forming a potential Bullish Reversal candlestick and a Bull Harami on the monthly time frame chart. The fact that we are seeing this price action at the support level of Rs. 210-211 reconfirms the Bullish Bias.
Now let’s take a look at Biocon on the Half-Yearly Time Frame
If we go a couple of time frames higher to the half-yearly chart, we are seeing the stock trading at the half-yearly mean. Its not very often that you get an opportunity to buy a fundamentally strong stock, at a half-yearly mean. This makes the reward to risk ratio extremely attractive for a positional trader, as well as for an investor.
Now let’s take a look at Biocon on the Half-Yearly Time Frame
If we go a couple of time frames higher to the half-yearly chart, we are seeing the stock trading at the half-yearly mean. Its not very often that you get an opportunity to buy a fundamentally strong stock, at a half-yearly mean. This makes the reward to risk ratio extremely attractive for a positional trader, as well as for an investor.
Let’s now take a look at Biocon on the Daily & Weekly Time Frames
On a little lower time frame chart, like the daily chart, the stock has inched pass the 20-day EMA for the first time after trading below it for more than 3 months. This, coupled with weekly oversold levels, and multiple bullish candlestick confirmations suggest that the stock is attempting to base around these levels for some time and getting ready for the next leg of up move.
To summarize, this surely is a case of a fundamentally good stock being available at a good price, and Investors as well as Traders should keep this on their radar!
Thanks for now, we will see you soon with some other charts and new insights in our upcoming Articles.
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Till then, Happy Trading and Investing!
