Shilpa Medicare shares jump 12% today amid heavy volumes; here's why

Shares of Shilpa Medicare Ltd rose sharply in Tuesday's trade amid heavy volumes. The stock jumped 19.21 per cent to hit an intraday high of Rs 278 over its previous close of Rs 233.20. The scrip eventually settled 12.01 per cent higher at Rs 261.20. Around 6.49 lakh shares changed hands today, which was more than nine times compared to the two-week average volume of 70,000 shares. Turnover on the counter stood at Rs 17.13 crore, commanding a market capitalisation (m-cap) of Rs 2,267.27 crore. Today's sharp movement in the share price came after the pharma firm received US Food and Drug Administration approval for its drugs to treat adult patients with active psoriatic arthritis.

"This is to inform you that the company has received US FDA final approval for its ANDA, Apremilast Tablets, 10 mg, 20 mg, and 30 mg for the treatment of adult patients with active psoriatic arthritis. The product is executed from a contract manufacturing site. Apremilast Tablets, 10 mg, 20 mg, and 30 mg is a generic equivalent of reference listed drug (RLD) OTEZLA of Celgene. According to IQVIA MAT Q4 2022 data, the US market for Apremilast Tablets, 10 mg, 20 mg, and 30 mg is approximately $3.55 billion," the company stated in an exchange filing.

At today's closing price of Rs 261.20, the stock traded 17.45 per cent higher from its 52-week low of Rs 222.40, hit on March 28 this year. That said, the counter has plunged 48.08 per cent from its one-year high of Rs 503.05, a level seen on April 13, 2022.

On a year-to-date (YTD) basis, the counter has slipped 6.55 per cent. Support on the counter could be seen at Rs 246, followed by Rs 240 and Rs 220 levels.

The stock was last seen trading higher than the 5-day, 20- and 50-day moving averages but lower than the 100-day and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 57.82. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 16.65.

Shilpa Medicare has an average target price of Rs 468.50, Trendlyne data showed, suggesting a potential upside of 82.51 per cent. The scrip has a one-year beta of 0.63, indicating low volatility.

"The counter is in a secular downtrend and is hovering well below its 200-SMA on the daily time frame, indicating inherent weakness in the counter. Recently, the stock has seen some buying emergence at the lower zone; however, the overall structure remains frail. From a short-term view, the immediate support lies around the bullish gap of Rs 240-246, followed by the swing low of the Rs 220-odd zone. While on the higher end, a stiff resistance is placed around the Rs 270-280 zone, followed by Rs 300 in a comparable period," said Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One.

"Recently the said counter has seen some buying interest from lower levels. Moreover, buying has been supported by healthy volume which hints toward upside momentum in the coming few weeks. On the indicator front: Daily RSI has made a bullish regular divergence which further compliments our bullish stance. One can buy in small tranches in the range of Rs 255-260 and another in the range of Rs 240-250. The upside is expected till Rs 300 and the stop-loss would be Rs 221 on a daily close basis," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

"The stock looks bullish with strong support now at Rs 246. A daily close above resistance of Rs 257 today could lead to targets of Rs 274-295 in the near term," said AR Ramachandran from Tips2trades.

Meanwhile, Indian equity benchmarks today extended their gains for the seventh straight session, led by gains in banks, financials, automobile, metal and energy stocks.

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