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Investors with a short-term perspective and contrarian view can buy the stock of Cipla at current levels.
On Wednesday, the stock advanced 3.6 per cent with good volume after taking support at ₹410. In late May this year, the stock had encountered a resistance at ₹585 and began to decline. Since then, the stock has been in an intermediate-term downtrend. The stock extended the downtrend and breached a key support at ₹450 in late September. But, it found support in the band between ₹400 and ₹410 last week after registering a 52-week low at ₹403.
Triggered by positive divergence in the daily relative strength index and price rate of change indicator, the stock gained recently. It is on the brink of trend reversal. There has been an increase in daily volume over the past two weeks.
The daily RSI is likely to enter the neutral region from the bearish zone. Besides, the weekly RSI is recovering from the oversold territory, indicating that the corrective rally is on the cards.
Taking a contrarian stance, the short-term outlook appears to be positive for the stock. It has the potential to trend upwards and reach the price targets of ₹441 and ₹450 in the coming trading sessions. Traders can buy with a stop-loss at ₹414.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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