Don’t Miss IPCA Laboratories from Trading Perspective

  • Stock Market Analysis

About the company:
IPCA Laboratories is engaged in the manufacturing and marketing of pharmaceuticals. The 52-week high and low for the stock are Rs 2,460 and Rs 1,622, respectively. It is presently trading at a discount of 14% from a 52-week high level.

Technical observations:
One week time frame: (Fig 1)

The stock made an all-time high in October 2020 and then pulled back and made a base at Rs 1,840 from January 2021 until April 2021. On the weekly charts, the stock has now formed a diamond bottoms reversal pattern. This week's breakout, accompanied by the Relative Strength Index (or RSI), shows strength by moving above 50.
IPCA1
One day time frame: (Fig 2)

Today we witnessed weakness in the market, and as a result, the stock closed in the red. After making a high of Rs 2,300 on May 27, the share pulled back to Rs 2,000 level and has now broken out from a falling wedge. However, the RSI has managed to stay above 60, which is showing strength in the stock. If RSI sustains above 60 and average daily volumes increase next week, it will be an excellent indication to enter this stock on the long side for the medium term.
IPCA2
One hour time frame (Fig 3)

The stock has shown a tremendous run-up since July 5 and is currently pulling back. The hourly candle at the end of the day closed in red due to weakness in the market. However, the stock has managed to complete the above necessary support of Rs 2,100 level. We are also witnessing above-average volumes on the hourly charts, which shows strength in upward momentum for the stock.
IPCA3
Conclusion:

We expect the stock to maintain positive bias and head higher in the medium and long term. Short-term traders should enter by keeping Rs 2,080 as stop loss and medium-term positional traders should trade with a stop loss of Rs 2,000 (which is the previous swing low on a daily time frame) on a daily closing basis.

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