Pharma Stocks showing relative strength while the broader market looks overbought and other breakout stocks

Update on fresh breakouts and the sector rotation

Pharma stocks showed a lot more strength today and gained on high volumes. This was seen not just in the Large caps but across the market caps for the pharma sector. The charts below show the stocks with the technical commentary. Please note this is not investment advice.

SUN PHARMA

Stock breaking out above the congestion zone on high volumes.

CIPLA

Stock is just peeping above the resistance. If it breaks out above this level we will see a lot more interest coming in.

DRREDDY LABS

The stock is again forming a very nice pattern on the long term charts. From the charts it looks like a continuation pattern in the long term uptrend. The break above the nearby resistance will set it up for a nice rally.

RATIO CHART

The ratio chart of the pharma index to the nifty shows a very nice continuation pattern forming within a larger reversal pattern. This shows the sector is likely to outperform the market.

FINAL NOTES

Pharma sector is typically seen as a defensive sector, and despite the banks and the autos not performing well we saw considerable interest in the sector. The US markets are looking weak at the time of writing this and so are the European markets. There is a good chance that the market participants are looking at sectors where the risk is lower and perhaps the pharma sector is benefitting from that.

DISCLAIMER :

NOT INVESTMENT ADVICE. ONLY FOR INFORMATION PURPOSES.