F&O Stock Cracks 9%; Breaks ‘Major’ Support!

  • Stock Market Analysis

While the mood of the markets was quite good throughout the day, a bit of selling pressure was witnessed during the last one hour of trading. The Nifty 50 index closed the session, 0.3% up at 18,618.05, falling a bit from the day’s high of 18,677.7.

However, there were some stocks that remained weak throughout the session, and shares of Laurus Labs topped the list of these losers (in the F&O space), falling over a massive 9.2%. It is a midcap pharmaceutical business, having a market capitalization of INR 24,199 crores and currently trades at a P/E ratio of 29.24, compared to the industry’s average of 35.92.

Interestingly, the pharma space was the second-best performing sector for the day, with the Nifty Pharma gaining 0.72% to 13,087.35 by the closing. While a few individual stocks such as Gland Pharma (NS: GLAD ) gained as much as 9%. Clearly, Laurus Labs had severely underperformed not just the broader markets but also its respective sector and therefore it should be kept on the list of weak stocks for the coming days.

Image Description: Weekly chart of Laurus Labs

Image Source: Investing.com

As the stock cracked over 9.2% to INR 408.6, it broke a very major support of INR 440 and that too on a closing basis. Sometimes, such a sharp fall is met with a very robust demand from the lower levels and the stock ends up closing significantly higher than the day’s low. But in the case of Laurus Labs, even the closing at such a lower level has confirmed a major breakdown in the stock.

The level of around INR 440 supported the stock a couple of times this year and both times when this support was tested, the stock surged noticeably higher to over INR 600 levels. Now as this level is out of the way, further potential of a continued down move is open. The volume that is depicting the intensity of today’s selling spree is also quite high, with over 12.58 million shares exchanging hands. To put it in perspective, this is the highest one-day volume in over 17 months.

After such a massive dump, a counter-trend rally could easily be witnessed which might take the stock to a level of the previous support (now resistance), at around INR 440. However, that should be looked at as an opportunity to exit long positions not initiating new longs. On the downside, a level of around INR 385 could be a piece of cake for the stock. 

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
  • namami ghosh @namami ghosh
    sob... sob... part of my portfolio
    Like 2
    • Avinash Singh @Avinash Singh
      f o
      Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Ouch!
      Like 1
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
  • gitesh shah @gitesh shah
    Possibly reaching it's demand zone around 380.
    Like 0
    • KAMALINI SAGAR @KAMALINI SAGAR
      which one
      Like 0
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100

Related Articles