Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Indian benchmark indices hit fresh highs, but could not sustain at the peaks, driven by lacklustre movement in the indices. However, Nifty Pharma index has surged as much as 3 per cent and thereby it has refrained markets from correcting from their all-time high levels. Pharma, which forms 3.98 per cent of the Nifty 50, has enabled markets to trade flat, though not very positive.

Sun Pharma, a Nifty 50 stock, which forms 27.44 per cent of the Pharma index, surged 6 per cent plus after USFDA approved its new drug application. Technically, the stock witnessed a downward sloping trendline breakout at Rs 563 level. Moreover, the stock has succeeded in giving bullish reversal by breaking and sustaining previous resistance breakout after it started with lower tops and lower bottoms in April 2015. Even Dr Reddy's, which forms 12.73 per cent of index, and Aurobindo Pharma, which forms 8.97 per cent, have surged 2.4 and 1.9 per cent, respectively.

Coming back to the index, it has given a consolidation breakout at the 9420 level today with rising volumes and 14-period RSI rising from 59 to 69 levels in a single day. RSI also witnessed multiple point downward sloping trendline breakout. The stock price also broke out of its 200-day EMA resistance level at 9628. Hence, if the index sustains 9420, followed by 9628 on the upside, it has a long way to go.