Stocks trading above their 30 WMA should never be shorted especially if the moving average is rising. A trader can look at the 10 WMA instead as he is more interested in intermediate term moves. In the present condition, there are two sectors which are quitebullish and these are pharma and software sectors. The pharma sector has many sub-divisions and there are many companies within each of these groups. Today, I will take a look at the group - Indian pharmaceuticals - bulk drugs & formations. Other groups in the sector will be taken in the coming weeks. Though there are many stocks which are in a major uptrend, there are some small stocks which are now likely to move up and investors can also add long positions in a few of these stocks. I will however look into some of the major players in this group.

Alembic Chemicals

Alembic Chemicals bottomed out in 1998 and went into a major uptrend. The stock has been staying above its rising 30 WMA and exhibiting a bullish relative strength. With the pharma sector still quite bullish, investors must stay invested in the stock. The relative strength line for the stock has been exhibiting higher tops suggesting that the stock continues to outperform the Sensex and higher levels in the stock will be seem.More long positions in the stock must be added when the stock pulls back towards its 30 WMA in the next intermediate downtrend.

Aurobindo Pharma

Aurobindo Pharma bottomed out in 1997 and since that time the stock has been staying in a major uptrend as it has been exhibiting ascending intermediate tops and bottoms. In the past few weeks, it has been moving in a narrow range, that is, moving above its rising 30 WMA and below 670. A close above this resistance with a rise in volume will give a good upward momentum and higher levels will be seen in the stock. This breakout can be used by traders to look out for long positions for an intermediate term. Investors must continue to hold on to their long positions in the stock.

Cipla

All the investors in this stock have not only been benefited by the generous bonus but also by the price rise. Cipla has been exhibiting a very bullish relative strength and since its bottoming out in 1995, the major trend of the stock is up as it continues toexhibit ascending intermediate tops and bottoms. As the stock has been outperforming the Sensex and all the other stocks within this sector, investors must hold on to the stock. There are no reason to look out for sell signals in the stock.

Dabur

Like many of the other stocks in this sector, Dabur is also in the new high territory. This means that the stock has no sellers at higher levels and there is no one who has bought the stock at the prevailing price and would like to get out even. Stocks like these have very small resistances at higher levels and their upward momentum are pretty strong. The same is also the case with Cipla. With the sector also quite bullish, there is no reason to liquidate the stock and investors must hold on to the stock.

Dr Reddy's Labs

Dr Reddy's Labs bottomed out a little later in 1996 and since then the stock has been in a major uptrend. The relative strength line has been staying above its zero line since 1997 and investors must stay invested in the stock.With majority of the stocks in this sector bullish and with no stocks showing any signs of weakness, investors must stay invested. Dr Reddy's is also in the new high territory and higher levels will be seen in the stock as there are very sellers at these levels.

JB Chemicals

JB Chemicals bottomed out in August after the stock broke out of the strong descending trend line with a rise in volume. Since August 1998 till August 1999, the stock was moving sideways and was oscillating about the 30 WMA. The relative strength line for the stock also shot up in August and went into a major uptrend. With the intermediate and the major trend of the stock up, higher levels will be witnessed. More long positions can be taken up when the stock pulls back towards its 30 WMA.

Nicholas Piramal

Nicholas Piramal is also in the new high territory but has still to cross its all time high. The stock has moved above its earlier intermediate top and higher levels in the stock will be seen in the next few weeksas the stock has recently broken out of the sideways momentum with a rise in volume. Any minor decline in the coming week must be used to add to the long positions in the stock. The relative strength line, which had weakened recently, has also moved up and is rising suggesting that the stock has been out performing the indices. Investors must continue to trade the stock on the long side.

Ranbaxy

Soon after the stock went ex-bonus, it bottomed out and started to zoom ahead with a rise in volume. The stock which was moving sideways for many years also zoomed ahead and went into a new high territory. The intermediate trend is down but with the relative strength quite bullish, investors must continue to hold on to their long positions. Traders must look out for long positions as soon as the intermediate trend turns up.

Sun Pharma

Sun Pharma bottomed out in January 1999 and not only closed above its earlier intermediate top but also closed above the all-time high level to enter the newhigh territory. The relative strength line has strong moved above its zero line since mid-year as the stock continues to exhibit higher levels. All the breakouts for mid year have been accompanied by a rise in volume which is a very bullish sign. Stay fully invested.