Dr. Reddy’s Laboratories Ltd., one of India’s largest drug firms, is the nation’s worst-performing stock in July on disappointing earnings and a U.S. probe. But one technical indicator suggests the shares could be due a snap back.
The stock’s relative strength index has dropped to a level indicating the shares are oversold. When that’s happened over the past five years, shares of the Hyderabad-based company have rallied about 15% on average in the 20 subsequent trading sessions, according to data compiled by Bloomberg.
Bloomberg
Dr. Reddy’s earnings trailed estimates and the company has disclosed that it’s responding to a subpoena from the U.S. Securities & Exchange Commission. Jefferies India Pvt. analyst Abhishek Sharma, who rates the stock a buy, said in a note the SEC probe “could be material” if it leads to an adverse finding, but shouldn’t affect “our thesis on the company.”
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