Divi’s Laboratories Breaks Out from Cup and Handle Pattern

On Tuesday, Indian markets are seen trading choppy with Nifty and Sensex trading with modest losses. Talking about the sectoral indices, most of the sectoral indices are trading in red barring Nifty Pharma (+0.40%) and Nifty Metal (0.01%).

Divi’s Laboratories Top Gainer:

On Tuesday, the shares of Divi’s Laboratories gained 2.72% and it has hit a fresh 52-week high on the NSE. The stock opened at a level of Rs 4242.75 and as the session progressed the stock compounded its gains and touched an intraday high of Rs 4386.50 per share on NSE.

About the Company:

Divi’s Laboratories Limited is one of the largest manufacturers and suppliers of Active Pharma Ingredients (APIs) and intermediates for global innovator companies, with a presence in over 100 countries. It is positioned as one of the two largest generic API manufacturers in the world for 10 out of 30 generic APIs it manufactures. It also offers custom synthesis (contract development and manufacturing organization – CDMO) of APIs and nutraceutical ingredients with an overall product portfolio of over 160 products across cardiovascular, anti-inflammatory, anti-cancer, and central nervous system (CNS) therapy areas. Within the nutraceuticals segment, the company manufactures active ingredients and finished forms of Carotenoids, Lutein, and vitamins.

The company has two manufacturing plants located in Hyderabad and Andhra Pradesh, India. The Generic APIs and Nutraceutical ingredients contribute 54% of revenue. The Custom Synthesis or contract manufacturing division contributes 46% of the revenue. It exports to the USA and Europe with 69% of total export revenue driven by these two regions.

Technical View on Divi’s Laboratories

Technically, Divi’s Laboratories has closed above the prior pivot of the 20-week cup and handle. It also closed above the 50% retracement level of the prior downtrend and broke Stage 2. By forming a third higher low, it confirmed the uptrend and formed a series of higher highs. It is trading above all key long-term averages, being 12.94% above the 50-DMA and 14.90%above the 200-DMA.

The weekly RSI shifted its range into the strong bullish zone. The Relative Strength is also above 21 EMA, which is a positive sign. MACD shows improved bullish momentum, and the KST and Stochastic RSI have given fresh, bullish signals. In short, the stock registered a bullish breakout.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.