From the last few days Indian Equity Markets are witnessing very volatile intraday movements. Both investors as well as traders are in a state of confusion as it was a volatility spread across many sectors. As the markets are near lifetime highs; it is adding to the insecurity for the market participants.
You may recall that we have also discussed Pharma Index in March this year. Today we are going to do a study and discuss about Nifty Pharma Index again. And also we will discuss some of the companies individually.
When we perform Technical Analysis of any Index, specifically any sectoral Index; first thing we should do is to identify the trend of that particular sector.
If the index is showing strength technically then we can study charts of the individual stock from the same sector and we can find good buying/investing options in that particular sector.
On a Daily Chart Nifty Pharma Index is showing a kind of Inverse Head & Shoulders Pattern which is a bullish candlestick pattern. This means that the Index is on the verge of Breakout ahead whenever it trades above 14500 levels. The target of the pattern is derived to be 15300-15500 in coming days, sooner or later. The Candlestick Pattern is also supported by Indicators like RSI which is showing a positive divergence and supported by a rising trend-line as shown in the chart below. MACD is also supporting our view as it is rejecting the Zero Line and going upwards.
To support our view and for a cross check, we conducted studies in the individual companies from Pharma sector and were not surprised at the outcomes. We shall discuss the same in detail in the next blog. Read the upcoming blogs for individual studies.