Sun Pharma pounces on upgradation news

Sun Pharmaceuticals which holds 26 per cent weightage in the Nifty Pharma Index surged more than 7 per cent in Monday’s trade, uplifting the Nifty Pharma Index by 2.4 per cent. Sun Pharma was the top gainer in Nifty50, while Pharma Index was the second highest gainer among the sectoral indices. Sun Pharma witnessed a gap-up opening and soared in the first hour of the session and consolidated for the remaining session. Volume spurt and oscillators hitting above 50 supported the move.

The research house CLSA, Macquarie upgraded Sun Pharma’s rating after its Q4FY18 results. The company posted its results on the last trading day of the last week. CLSA upgraded the company to Buy from Sell as it believes its earnings have bottomed and the worst is over. Consolidated revenue declined 1.1 per cent but profit rose 6.94 per cent YoY. Macquarie upgraded its rating from Underperform to Neutral, while Edelweiss, Deutsche Bank and Jefferies have maintained Hold. HSBC downgraded to Hold from Buy.

Since May 4, Sun Pharma has seen its share price tumbling, where it broke its multiple support zone of 497-492 followed by its next major support at 466-460. The stock of Sun Pharma was saved from breaching its multi-year support at 432. Accordingly, the stock bounced back from 435 level up to 61.8 per cent retracement of the downward rally from 539. The level of 515, followed by 535-540 acts as resistances, while if it retreats from here 488-478 followed by 469 as the gap filling levels would act as support.