Lupin Shares: A Technical Analysis and Future Outlook

The recent performance of Lupin shares has been a subject of much interest and debate in the market. Moving from a high of Rs. 1457 to almost half that amount, investors are questioning whether it is worth purchasing now or if the stock will continue to fall in the near term. This article delves into the technical analysis and provides insights into Lupin's potential trajectory for long-term investors.

Current Market Trends

According to the daily chart, Lupin is currently following a channel pattern, which suggests that there is potential for a target price of 1140-1160 in the upcoming trading sessions. Additionally, the MACD has given a positive crossover, indicating a buying opportunity. Traders are advised to initiate a long position above 1100.00.

Historical Performance

It is worth noting that over the past decade, 2008 and 1998 saw negative years for Lupin. Similarly, 2018 also showed a decline. However, if we examine 1999 and 2009, we see that Lupin's stock price increased by more than 100%. This historical data suggests that despite current market trends, Lupin has shown resilience in previous downturns. Does this pattern foreshadow a similar scenario for 2023?

Long-term Buy Decision

Despite the recent decline, Lupin is a definite buy for the long term. However, the real questions are whether it is the right time to buy and if this is the bottom. The technical indicators and fundamental analysis suggest that Lupin has not yet hit its bottom, with bearish indicators present in both technical and fundamental analysis.

For those looking for quick profits, trading put options on monthly highs could be a viable strategy. Additionally, there have been reports of price reductions in generic drugs, which could affect Lupin's margins and EBITDA. Fund houses predict further de-rating for pharma stocks due to increasing price erosion in the US market.

Technical Analysis

Technical indicators such as RSI and Williams %R show that Lupin is currently oversold, offering a potential buying opportunity. However, it is crucial to remain patient. The stock has rallied from around Rs. 800 to its all-time peak of Rs. 2100 in the last four years. Recently, Lupin slipped past its short support level of Rs. 1285 and is moving in a downward direction.

Based on the technical indicators, my 12-month target for Lupin is between Rs. 1018 and 985, a 18% discount from the current levels. For those looking for high up opportunities, buying put options at lower levels can be beneficial. For long-term investors, patience is recommended as these stocks are not likely to see a rapid increase in value. Investors should consider using short-term trading opportunities and taking profits at appropriate levels.

Conclusion

While Lupin shares are showing signs of a potential recovery, investors should approach this stock with a long-term perspective. The recent decline offers a buying opportunity, but it is important to understand the broader market trends and indicators that can influence the stock's performance.

Key Takeaways:

Lupin is showing potential for a recovery based on positive technical indicators. Historical data suggests that Lupin has previously shown resilience in previous downturns. It is currently the right time to consider put options for short-term traders.

Ultimately, while the long-term buy signal is present, patience and strategic trading are recommended for optimal performance.