Analysis: GLAXO

Today’s pick is GLAXO [stockquote]GLAXO[/stockquote]. The uptrend that started in the beginning of the year lasted till April touching the highs of Rs. 2,300, post which the stock moved back to the support level of Rs. 1,925 in a month. The up-move that started later saw a resistance around Rs. 2,200 levels and stock corrected itself back to the support levels by October. Since then the stock is in an up-trend. In the last three months, the stock has moved +10% vs. +7% of the Nifty’s.

GLAXO technical analysis chart

Oscillators RSI and CMO are deep into the over-bought territory, giving out a bearish signal for the stock. Long term SMA’s just saw a 50×200 bullish golden cross-over.

The MACD line is moving towards the signal line, accompanied by the falling histogram levels such movement is suggesting an imminent bearish move for the stock. The long-term GMMA lines are well dispersed out, suggesting a bullish outlook for the scrip. However, short-term GMMA lines are starting to move towards each other giving a bearish outlook for the short term .

GLAXO correlation chart

GLAXO’s average correlation with the Nifty is 0.13 is positive. The scrip will not be replicating the movement of Nifty closely. [stockquote]NIFTYBEES[/stockquote]

GLAXO volatility chart

GLAXO has a historical volatility in the range of 0.2 to 0.5. The scrip’s volatility currently is in the middle of the range.

Given these technicals, we suggest a short-term Hold. Looking at the well dispersed GMMA lines and the golden cross signal we suggest a long-term Buy for the script. . It will be beneficial to have trailing stop-losses in place, in order to book profits if a correction is seen around the resistance levels.

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