Today’s pick is [stockquote]DRREDDY[/stockquote]. The last year saw the stock trading in a 1500 to 1800 range and the stock is in an up-trend since July lows. In the last three month period, the stock was up 5.5% vs. the Nifty’s 8.3%. The stock is approaching 52-week resistance at 1815 levels, after bouncing off the support at 1500 levels.
The GMMA chart shows both long-term and short-term lines fanning out. If this continues, it would be extremely bullish for the stock.
DRREDDY has a historical volatility in the range of 0.25 to 0.45 which is a very narrow range. The scrip’s volatility is currently in the middle range and hence should not be a concern.
Analysts already have high expectations regarding this stock, as is evident from the very high proportion of the buy and outperform calls. A single earnings miss from the firm, or an analyst downgrade might trigger a steep slide in the stock. Also, insiders have sold about Rs. 3.5 Cr. worth of NCD’s in the last one month period.
Looking at these technicals a short-term hold is suggested. A break-out/continued resistance at the 1800 levels will be essential to direct the stock either to an up-trend/down-trend.