After a long time Nifty Pharma Index looks to be out-performing the Index and we could be getting a short term rally soon.

NIFTY PHARMA INDEX

From a technical standpoint there are several reasons to look at the Pharma Index. The sell-off in the market recently was pretty broad-based, but the pharma index was still not hurt that badly.

  1. The long lower shadows(highlighted) on the candle-stick chart show the demand that existed at lower levels. These signal that at the current level the buyers overwhelm the sellers.
  2. The black horizontal line represents the pivot level where the prices today took some support and bounced up. Notice the long lower shadow for today again. It signifies that the buyers took control when the prices broke down to lowerl levels.
  3. The falling channel looks more like selling exhaustion rather than accelerated selling. It denotes that the sellers are now out of the market and the shares have moved to stronger hands.
  4. The next level for the Index is at the 8400 levels which gives us significant head-room for the upside rally. From the current over-sold levels we could get a sharp rally in the short-term for the Index.

After analysing the Index we should look at the stocks in the sector and then perhaps zero in on the buying candidate. Keep following the blog for more updates on the specific stocks. Happy Investing !