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Informist, Friday, Jan. 3, 2025

MUMBAI – Shares of pharmaceutical companies are likely to rise more next week on expectation firms will post healthy earnings for the December quarter, analysts tracking the sector said. These stocks may also benefit from the rupee depreciation and the buying interest towards defensive stocks amid near-term uncertainty in the overall market ahead of quarterly earnings, they said.

There is some uncertainty about the direction that the market will take next week before corporate earnings announcements begin. This scenario is a result of choppy fund flows by overseas investors and worries of weaker-than-expected earnings for the December quarter across several sectors, analysts said. In this backdrop, some investors are likely to turn risk-averse and flock to the defensive sectors, such as pharma, they said.  

In the near-term, large-cap pharmaceutical companies are expected to grow in the mid- to high-single-digits, Vishal Manchanda, senior vice-president at Systematix Group, said. However, the sector will experience lower mid-single-digit growth in the medium-term compared to the near-term, he said. The large-cap companies are expected to report a top line growth of 5-6% in the medium term, he said.

Among drugmakers, Lupin is likely to outperform in terms of net profit growth as the company has multiple launch opportunities in the US, Manchanda said. Export-oriented pharma companies with a significant market in the US may benefit from the recent depreciation of the rupee against the dollar, analysts said. Friday, the rupee ended at a record-closing low against the dollar for the ninth consecutive trading day. The local unit closed at 85.77 per dollar Friday.

On the other hand, some analysts raised concerns about stretched valuations in select stocks and possible policy changes that President-elect Donald Trump could roll out after his swearing in later this month. The Nifty Pharma index snapped a six-day winning streak and ended at 23263.50 points, down 1.2% Friday. Despite this fall, the index has ended the week with over 1% gains.

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Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Ayushman Mishra and Alina Geogy

Edited by Deepshikha Bhardwaj

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