Today’s pick is BIOCON [stockquote]BIOCON[/stockquote]. The stock started the year with a sharp up-trend taking the stock up to Rs. 300. It then started its downward move to fall to Rs. 220 levels by mid-May. Since then the stock has been on an uptrend and saw its 52 weeks high of Rs. 320 level in November. The stock however underwent flag formation which broke down early January, and the stock is currently tracing back the losses. In the last three months, the stock has moved +1% vs. +6% of the Nifty’s.
Oscillators RSI and CMO are in no man’s land. The stock is trading in the middle of Bollinger band not suggesting any directional move. However, short-term technical just saw 4×9 bullish cross-over.
The MACD line has just penetrated the signal line, giving out a bullish signal for the stock. Long-term and short-term GMMA lines are moving very close to each other and hence are not giving any directional bias for the stock.
BIOCON’s average correlation with the Nifty is 0.60 which is positive and strong. The scrip will be replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]
BIOCON has a historical volatility in the range of 0.3 to 0.6. The scrip’s volatility is currently in the lower end of the range.
Given these technicals, we suggest a short-term BUY. For the long-term, we will have to wait for the GMMA lines to spread out to give any direction for future. However, for risk management we suggest having trailing stop-losses in case trend-reversal were to take place.
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