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Has The Tide Turned For Ajanta Pharma??

Has the tide turned for Ajanta Pharma??

Ajanta Pharma on April 30 reported a 5.92 per cent decline in its consolidated net profit to Rs 88.89 crore for the March 2019 quarter, mainly on account of a decline in anti-malarial business.The company had posted a net profit of Rs 94.49 crore for the corresponding period of the previous financial year, Ajanta Pharma said in a filing to the BSE.Its consolidated revenue from operations fell to Rs 515.16 crore as compared with Rs 530.31 crore for the corresponding period a year ago.”The decline in anti-malarial business impacted the performance of the quarter and the year,” Ajanta Pharma Managing Director Yogesh Agrawal said.Other businesses have posted growth and continue to perform well, he added.

For full financial year 2018-19, the company’s consolidated net profit was Rs 387 crore, against Rs 469 crore for the corresponding period a year ago.

The firm posted revenue from operations of Rs 2,055 crore for the fiscal year ended March 2019. It was Rs 2,131 crore in the previous fiscal year.

Technical View

The fall in the counter halted at the 61.8% Fibonacci retracement of the entire swing. For a stock to remain in the bull trend the 61.8% of the major swing should not be broken. The stock did respect the zone around the 876 levels and reversed from there.  There are multiple  technical indicators pointing at a potential reversal from  here. The stock has made a double bottom at the support zone. Double bottom is a direction signal and in itself a strong indicator. At the  first bottom we see the volume being higher that the other bottom. A stock always bottoms on low volume. Hence we also have a volume confirmation. RSI has now taken support over the 40 levels which is the support of the RSI in a bull trend. And lastly we have the Fibonacci confluence zone at the 897 levels. Therefore multiple support zones in the same area is pointing at a strong probability of reversal from the current levels.  The break of  the long term  trend line is stopping the stock from moving up. Hence once the  trend line is conquered  and the stock moves above the 1115 levels the stock should witness good move on to the upside. The minimum rally from here is expected to be till 1368 which is some 30 percent from the current levels.

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