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ATH Breakout: This Large-Cap is Not Stopping Anytime Soon

Published 11-06-2024, 09:34 am

As the broader markets are trading near their all-time high levels, many sectors are mimicking the same move. The Nifty Pharma Index which consists of 10 pharma companies is also hovering near its all-time high and one of its constituents - Cipla (NS:CIPL) should be kept on the radar.

The company has a market capitalization of INR 1,20,022 crore and holds a weightage of 12.37% in the pharma index, making it the 2nd highest-weighted stock. On Monday, the stock rallied 2.4% to INR 1,534.25 and surged past its horizontal resistance of INR 1,520 and that too on a closing basis.

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Image Description: Daily chart of Cipla with volume bars at the bottom

Image Source: Investing.com

This breakout was supported by a volume of 2.75 million shares, which is not very high but still higher than the 10-day average of 1.85 million shares.

There are 2 factors that are in favor of this counter. Firstly, the stock is trading at an all-time high which is an extremely bullish signal. Secondly, the entire sector is trading at a new high, meaning the stock is also backed by good sectoral strength.

To check the fundamental strength of this counter, traders can simply look at the financial health score in InvestingPro, which in this case is 4 out of 5. This toll checks over 100 parameters across 5 categories such as growth, cash flow, profitability, etc., and gives a score to each category. All 5 scores are then combined to arrive at a final figure. Any rating above 3 is good (the higher the better).

This tool can be used as a primary filter to screen stocks on their fundamental strength without even having to go through their financial statements. This is the ease retail investors can experience and make smarter investment decisions.

Coming back to the technicals, as the stock is at an all-time high, there are no further resistance levels left. To estimate the target, traders can eye for INR 1,700 which has been arrived at by taking the approximate width of the consolidation phase that occurred prior to the breakout.

You can check the financial health score of any stock along with other features such as fair value, ProTips, etc., all in InvestingPro. Click here and get InvestingPro now at a steeply discounted rate of INR 216/month, all thanks to the limited-time sale of 69% off! Hurry up and grab your offer today!

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X (formerly, Twitter) - Aayush Khanna

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