Nifty Pharma at record highs, in for a long haul

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Despite massive sell-off in the markets shares of pharmaceutical companies are in demand at the bourses. The Nifty Pharma index closed at record highs of 13,426 gaining 1.29% on Tuesday, while the benchmark Nifty index ended below 14,300-mark at 14,296 after tanking 0.44%.

Investors lapped up pharma stocks as the Indian government announced vaccine liberalization and will open up vaccination to anyone over 18 years of age starting May 1.

Commenting on the pharmaceutical sector, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, “the market is driven by the hope that in this race between the pandemic and vaccination, the latter will ultimately win.”

Cipla, Gland Pharma, JB Chemicals and Pharmaceuticals, Max Healthcare, Neuland Laboratories and Apollo Hospital Enterprises hit their respective record highs yesterday. On the other hand, Sun Pharmaceutical Industries, Cadila Healthcare, Glenmark Pharmaceuticals, Panacea Biotech and RPG Lifesicenes are among those that hit 52-week highs.

“Indian pharma – is all set for a structural value upgrade, led by a robust exports opportunity, supply chain de-risking by global pharma from China, strategic end-to-end integration, or led by PLI schemes, enhanced specialty drug efforts, and recovery of global pharma demand post covid. Also, the covid-led opportunities could be a catalyst in the near term,” stated Phillip Capital in a report.

Likewise, Siddhartha Khemka, VP – Head of Research (Retail) at Motilal Oswal Financial Services is of the view that the Indian pharma sector is in for a big structural shift. “Globally demand has improved ticket pricing regime has improved and even the regulatory regime has changed from being very strict to now allowing products and plants approval. The headroom for growth in pharma companies looks very promising as the sector can grow at 20-25% over the next two, three years,” said Khemka.

Phillip Capital is bullish on Aurobindo Pharma, IPCA Labs, Cadila Healthcare, Cipla, Sun Pharma, Lupin, Divi’s Labs, Dr. Reddy’s Labs & Biocon. Whereas Motilal Oswal’s top pick is Gland Pharma from the midcap pharma space.

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