Pharma Stocks Outlook
Seen up next week on fall in rupee, defensive buying
This story was originally published at 19:32 IST on 27 December 2024
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MUMBAI – Shares of pharmaceutical companies may extend gains and outperform those of other sectors again next week, analysts said. Investors are likely to resort to buying more shares of drugmakers as it is an attractive defensive bet amid uncertainty about the next move in the market, and slight near-term bearishness, they said. Further, the depreciation of the Indian rupee may also boost sentiment towards this export-oriented sector as several US-focussed drugmakers receive their payments in dollars.
Last week, the sector had gained as part of a "defensive play", said Prathamesh Masdekar, equity research analyst at BP Equities. The sector had seen buying despite broad-based selling across most other sectors and uncertainty over what direction the market would take amid a lack of major domestic and global triggers. This week, too, pharmaceutical stocks seemed to be among the top picks of market participants.
The Nifty Pharma ended in the green for the second week in a row. The index rose over 2% this week, thereby becoming the second-best performer among sectoral indices. In comparison, the benchmark Nifty 50 hardly rose 1% this week.
Most stocks in this 20-stock index ended with gains this week, led by shares of Ajanta Pharma, which gained over 6%. These were followed by shares of Biocon and Laurus Labs, which rose nearly 5% each this week.
The Indian rupee, which has been hitting fresh record lows since Dec. 16, ended at a record closing low of 85.5325 against the dollar Friday. The depreciation in the rupee may help drug manufacturers sell their products at lower prices in key markets such as the US, thereby leading to increased demand.
Pharmaceutical companies have been reporting good earnings in the last 3–4 quarters and strong results are expected again in the December quarter, said Masdekar of BP Equities. New product launches by several pharma companies will be an added positive, he said. Companies may report muted sales in the US due to the impact of price erosion, he said. Meanwhile, domestic markets will outperform the rest of the world, or RoW, markets, he said.
The long-term outlook for several pharma companies is quite positive, especially as "several drugs are going off patent in 2026", he said. Among these, the GLP 1 peptide medication, which will have a $100 billion market by 2030, is a huge opportunity, he said. Several drugmakers across the globe are looking to cash in on demand for such treatments for diabetes and weight-loss. Sun Pharmaceutical Industries, Dr. Reddy's Laboratories, and Divi's Laboratories are the major domestic players working on this, he said.
TOP HEADLINES
* Mankind Pharma promoters, their group cut shareholding in co by 2.2%
* Alkem Laboratories gets tax orders worth INR 3.75 bln
* Gland Pharma arm's Fontenay unit gets 10 observations from French regulator
* IPO Alert: Senores Pharma offer subscribed 93.41 times at close
* US FDA gives voluntary action indicated tag to Biocon's Bengaluru API unit
* Akums Drugs, global pharma co in pact to supply some formulations in Europe
* Biocon and Zentiva get decentralised procedure OK for Liraglutide in EU
* Aurobindo Pharma arm gets UK drug regulator's OK to sell cancer drug Bevqolva
* Fidelity Funds sells 1.2% stake in Granules India via block deal
Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:
| Company | Price | Week-on-Week Change in % | Resistance | Support |
| Abbott India | 29263.50 | 2.10 | 30239.60 | 28101.90 |
| Alkem Laboratories | 5482.70 | 1.00 | 5583.80 | 5345.10 |
| Aurobindo Pharma | 1269.95 | 2.30 | 1289.20 | 1241.50 |
| Biocon | 352.55 | 4.90 | 358.40 | 343.50 |
| Cipla | 1506.60 | 2.40 | 1529.90 | 1472.40 |
| Divi's Laboratories | 5881.05 | 0.60 | 5960.20 | 5830.60 |
| Dr. Reddy's Laboratories | 1389.45 | 3.40 | 1430.50 | 1325.00 |
| Gland Pharma | 1810.65 | 2.20 | 1850.30 | 1773.80 |
| GlaxoSmithKline Pharmaceuticals | 2274.45 | (-)0.10 | 2309.80 | 2223.40 |
| Glenmark Pharmaceuticals | 1585.95 | 2.90 | 1641.20 | 1512.60 |
| Granules India | 585.85 | (-)1.10 | 601.20 | 574.40 |
| Ipca Laboratories | 1632.65 | 3.20 | 1672.40 | 1568.00 |
| Laurus Labs | 586.70 | 4.90 | 602.50 | 562.60 |
| Lupin | 2227.80 | 3.60 | 2271.90 | 2160.10 |
| Natco Pharma | 1392.00 | (-)1.80 | 1432.20 | 1344.60 |
| Pfizer | 4873.95 | 4.40 | 4991.40 | 4750.30 |
| Sanofi India | 6112.20 | (-)0.80 | 6180.00 | 6036.10 |
| Sun Pharmaceutical Industries | 1861.25 | 2.90 | 1883.90 | 1825.40 |
| Torrent Pharmaceuticals | 3405.10 | (-)0.90 | 3465.40 | 3366.30 |
| Zydus Lifesciences | 972.40 | (-)0.10 | 999.50 | 944.50 |
| Nifty Pharma | 23008.35 | 2.30 | 23296.90 | 22546.80 |
| Nifty 50 | 23813.40 | 1.00 | 23989.20 | 23712.70 |
| S&P BSE Sensex | 78699.07 | 0.80 | 79224.90 | 78335.70 |
End
US$1 = INR 85.53
Reported by Alina Geogy
Edited by Akul Nishant Akhoury
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