Sun pharma has been the best performing stock in the Nifty index for the last 5 years and the trend still seems to be going strong.
The stock is making consistent higher high and higher lows. At the recent low of 562, the stock may have completed a minor wave 4 under the Elliott wave model and a trendline from the year low also passes just below that. With today's 4% move, the stock is looking like it has started its 5th wave up.
So, it makes enormous sense to place a stop below 560-555 (on a daily closing basis) and go long on this stock. If the wave count is correct, we should see Sun Pharma clock at least 650-674 in the next 2-8 weeks.
If for some reason, the stock drops below 555 on a closing basis, we are wrong and will have to exit the trade at a loss.
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