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Informist, Thursday, Apr. 3, 2025

By Alina Geogy

MUMBAI – Traders Thursday rushed to place bullish bets on the futures and options contracts of Indian pharmaceutical companies after US President Donald Trump exempted the sector from reciprocal tariffs. In the spot market, pharma stocks rose sharply after Trump's latest tariff announcement, triggering a relief rally in the sector.

Shares of IPCA Laboratories and Lupin gained almost 6% and 4%, respectively. Shares of Nifty 50-constituents Sun Pharmaceutical Industries and Cipla rose around 3% each. Dr. Reddy's Laboratories surged nearly 7%, though it closed with only marginal gains. This pushed the Nifty Pharma index up 2.3% to close at 21423.55 points.

In 2023-24 (Apr-Mar), India exported around $8 billion of pharma products to the US, its largest export destination, and it supplies around 40% of generics consumed in the US, and this move by the US administration will help sustain exports, Anuj Sethi, senior director at Crisil Ratings said in a note. "India has more than 650 manufacturing facilities approved by the US Food and Drug Administration, the second-highest number outside the US," he said. "They account for a quarter of all such certified facilities outside the US," he said.

However, the picture may not be as rosy as it seems, as there is a likelihood that the sector was spared for now, and that tariffs could be imposed at a later stage, some market watchers said. "Several potentially mitigating factors, such as the ongoing drug shortages and the higher cost of domestic pharmaceutical production in the US, and declining profitability of US pharmaceuticals firms, are expected to be taken into consideration before any such imposition," Sethi of Crisil Ratings said in the note.

Sun Pharma was among the most actively traded underlying stocks. It was the second best performer among the Nifty 50 constituents, closing 3.3% higher at INR 1,770. Traders added long positions to the options contracts of the stock. For call options expiring Apr. 24, the highest change in open interest was at the INR 1,820-strike, indicating an upside of almost 3% from the current level for the near-term. Premiums nearly doubled for this contract. For put options expiring later this month, the highest change in open interest was at the INR 1,760-strike, which is hardly 1% lower than the closing price.

Meanwhile, the April futures contract of the Nifty 50 closed at 23325.90 points, a premium of 75.80 points to the spot index. Open interest in the contract rose 4.1% to 13.12 million, according to provisional data.

--Nifty 50 Apr closed at 23325.90, down 113.05 points

--Nifty 50 May closed at 23453.95, down 96.80 points; 203.85-point premium to spot index

--Nifty 50 Jun closed at 23551.00, down 100.50 points; 300.90-point premium to spot index

Sun Pharma, Bajaj Finance, HDFC Bank, Tata Consultancy Services, Infosys, IDFC First Bank, SRF, BSE, Reliance Industries, Aurobindo Pharma, Coforge, State Bank of India, and Persistent Systems were the most actively traded underlying stocks.  End

Edited by Ashish Shirke

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