Pharma Stocks Outlook for the week – 25 to 29.05.2015

Pharma Stocks Outlook for the week – 25 to 29.05.2015
 Seen up next week amid a cautious market
Stocks of frontline pharmaceutical companies are seen trading up next week amidst a cautious market that rose nearly 2.5% during the week ended yesterday. Nifty is seen correcting next week after yesterday's up-move. In that environment, near-term outlook for pharmaceutical stocks is positive. Cipla Ltd's stocks are seen underperforming the sector, adding that the company's stocks will be the first ones to start losing if the sector exhibits any weakness.

Thursday, Cipla announced that it would acquire 51% stake in Ugandan company Quality Chemicals Ltd. The transaction has been done at 12x market cap/sales, which is on the higher side, though given the balance sheet of the company can be easily funded. Stocks of Dr Reddy's Laboratories Ltd outperforming its peers in the sector next week as the Hyderabad-based company's stock did not witness much of a fall as compared to other drug makers when the sector was seeing correction.

The BSE yesterday announced that Lupin was being included in its benchmark index, Sensex. Lupin's stock has recently bounced back, which should help it gain a positive momentum going ahead.