Divis Laboratories’ stock has been technically damaged by sudden burst of bubble. Only hunky-dory sector in Indian stock market which can stand on its foot is pharma after much publicized IT sector. Pharmaceutical companies stocks are like runaway trains, exhibiting near vertical rise on the charts. There is no way that this can continue forever. We did mention our simple pharma playbook in previous trade idea for Auropharma. In that post we have clearly mentioned that never chase the rally in pharma and just wait for some catalyst to shoot it down e.g. Ubiquitous FDA warnings.
An abate rise from 500 to almost 1400, tripling the stock in just 3 years – 2014 – 2016 end, has been undone by just couple of weeks! Nothing new in this story and such events happen many times in stock market. Lesson is simple that those who lost discipline and chased the stock are going to burn and those who have waited are going to be rewarded. Patience is hard to develop virtue 😉
DIVISLAB will become interesting below 700. Any spike lows below that near the 500 region +/- 100, will bring in ample buyers. And yes, you guessed that right that we will be buying from those levels too 🙂
Our other big pharma plays of the year are, (Please check the links)
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