October 2, 2025
Aurobindo Pharma USFDA
The ways of the USFDA are inscrutable and put in peril the fate of Pharma stocks. One stock saw its fortunes surging after a clean-chit. However, the fortunes will now plunge because the clean-chit is withdrawn. Traders are caught in the whipsaw and are crying foul at their mega losses
The ways of the USFDA are inscrutable and put in peril the fate of Pharma stocks. One stock saw its fortunes surging after a clean-chit. However, the fortunes will now plunge because the clean-chit is withdrawn. Traders are caught in the whipsaw and are crying foul at their mega losses




Mai Teri kah ke lunga…

Aurobindo Pharma is a favourite stock of punters across the Globe.

Its heavy debt levels coupled with dubious quality of management makes it a preferred candidate for daredevils to short-sell the stock.

If one is nimble with the short-sell and square-off, a tidy packet can be effortlessly made.

A trader named Mitesh Patel has been aggressively bearish on Aurobindo Pharma.

Mai Teri kah ke lunga…,” he proclaimed, cheered on by a massive follower base of 65,000 followers, as the stock plunged like a stone on the back of massive short-selling.

However, Aurobindo shocked everyone by suddenly announcing that it had received a clean chit from the USFDA.

The stock surged like a supersonic rocket, notching up massive gains of 20%+ in a matter of a few seconds.

One more record but on negative side this time. Lost 5.5% capital,” the trader announced mournfully as he and the other short-sellers scrambled to square off their positions and salvage something from the ruins.

He also revealed that he trades “naked” and “without hedges” and that this has enabled him to rake in a massive gain of 310% YoY.

Also, a strict adherence to capital allocation ensured that only 2.2% of the capital was lost despite the catastrophic situation.





Punters load up on the stock … only to crash land

In the aftermath of the euphoria surrounding the clean-chit, traders quickly grabbed the stock in the fond hope that they would be able to scalp a few points on the upside.

However, nobody had foreseen that the USFDA would do a somersault and rescind the approval.

Seasoned market watchers were at a loss for words at the unprecedented action.

Some traders lamented the sorry state of affairs while others put on a brave face.





Entire Pharma sector is at risk now?

One unsaid fear worrying everyone in Dalal Street is whether the fiasco by the USFDA will bring the surging rally in Pharma stocks to a grinding halt.

Pharma stocks have already notched up massive gains in 2020 on the back of euphoric buying.





Never trade without a stop loss or a hedge

Anyway, the take-home lesson of the Aurobindo-USFDA fiasco is that trading without a stop loss (or a hedge if the position is held overnight) can have disastrous consequences.

Also, one must bear in mind the position size and not get carried away by the euphoria and take out-sized bets.










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