Top trending stock: Torrent Pharma

The stock has found a strong base at Rs 2600 and has bounced back sharply on Tuesday.

Torrent Pharmaceuticals Limited is engaged in the manufacture and sale of branded, as well as unbranded generic pharmaceutical products. It is a midcap company with a market capitalization of about Rs 45400 crore. It is one of the strongest midcap company in its sector and has generated increasing revenues and net profits in the last three years.

With the company reporting good fundamental numbers, the domestic institutional investors have increased their stake in the past five quarters, which displays strong growth prospects in the company. The promotors hold about 71% stake of the company while the institutional holding is about 20%. The rest is being held by HNIs and public.

In the last few days, the stock was seen under pressure and has lost about 17% of its value since January. However, the stock has found a strong base at Rs 2600 and has bounced back sharply on Tuesday. The stock has surged about 1% and has crossed above its 20-DMA. On the technical chart, it has formed a strong bullish candle, indicating strong buying at lower levels. The strong price action is supported by good volumes which is greater than the 10-day average volume. The technical parameters also indicate improved strength in the stock. The 14-period daily RSI has jumped over its prior swing high. The MACD line is above the signal line and its histogram is rising steadily, showing good upside momentum. Technically, the stock seems to have bounced back from the oversold region and seeing a good recovery. With this, the stock is expected to test the level of Rs 2750 in the medium term.

Positional and short term traders can benefit from such oversold stocks, which can help them book quick profits. The pharma sector is expected to do well in the coming days, which can have a positive impact on stock’s performance. With a favourable risk-to-reward ratio, the stock seems to be a perfect candidate for positional trading.

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