We recommend a buy in the stock of Sun Pharma Advanced Research Company from a long-term horizon. It is seen from the charts of the stock that it has a significant long-term support in the base band between Rs 75 and 87. In the past, the stock has consistently reversed upwards whenever it had tested the aforesaid support band.
Similarly, the stock took support from this support level in mid-June this year and bounced up. Since then, the stock has been on a modest medium-term uptrend. The stock surged 10 per cent with good volume, emphatically breaching its moving average compressions (21-, 50- and 200-day moving averages) at Rs 79 and its immediate resistance around Rs 95 on Tuesday.
We observe that there is an increase in daily volume in the past two trading sessions. The daily relative strength index is featuring in the bullish zone and weekly RSI is on the brink of entering this zone from the neutral region. The daily moving average convergence divergence indicator has signalled buy and is about to enter positive terrain.
We are bullish on the stock from a short-term perspective. We expect its rally to prolong and reach our price target of Rs 110 in the months ahead. Traders with near-term perspective can buy the stock with stop-loss at Rs 90 levels.