Tuesday, July 21, 2015

Sun Pharma - Por Favor Senor !

My comments on above chart of Sun Pharma:

1) The stock was in decline mode ever since Daiichi exit in April 2015 from its all-time highs of around the Rs.1200 mark.

2) There is a breakaway down gap at the 1028-971 region which clearly indicated the end of the bullish moves in the stock (Please note its been on a major bull run since the 2009 bottom of around Rs. 100 mark).  This gap down region has proved to be a major resistance on subsequent attempt at upmoves.

3) There was a 2nd gap down at the 916 - 960 range during end of May,which has been covered up in the subsequent upmove in July. However the 3rd gap down (recorded today and not reflected in chart because this post is coming during market hours) in the region of 948 - 852 on 21/July/2015 on the back of company issued profit warning seems to indicate that the stock is in the final stages of its decline.
4) Long-term investors would do well to commence systematic instalment purchases with an outside downward target of Rs. 700-730 in mind. Whether the stock falls down to that level is the X factor but the fact remains that this company is going to come back strongly after ;
a) The costs (not just financial costs) of merging with Ranbaxy are digested.
b) The entire post-merger product portfolio is aligned to long-term goals of company.
c) The production facility/facilities under USFDA watch/warning are back online post payment of remediation charges, etc...

As always several/all Analysts/Pharma research jocks are now "downgrading" the stock - great job guys - bolting the door after the horse ......
For those recommending a wait and watch now, and mentioning possible cut of further 10% - my question- how do you time the purchase of a stock that opens 10% down on opening bell? not that its a habit for the stock - rather it has always been a steady mover - but recent history suggests volatile movements at opening bell - conspiracy theorists would note its presence in the derivatives segment!

Enuff said senor!

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