GOLDEN RULES FOR TRADING

Pharma Stocks Outlook for the week – 13 to 17.06.2016 (Seen falling next week; Cipla may buck trend)

Pharma Stocks Outlook for the week – 13 to 17.06.2016
(Seen falling next week; Cipla may buck trend)

Pharmaceutical stocks are expected to be subdued next week as investors continue to remain bearish on the sector on account of regulatory issues surrounding the companies and their weak earnings for the March quarter. In the recent past, the regulatory activism (US FDA's stringent inspections and actions) has created some uncertainties surrounding Indian pharma companies and could mar their financial performance in the near term.

Despite the regulatory issues putting companies' earnings under pressure, our view is positive on the long-term growth prospects of the sector. Market participants would prefer to invest in other sectors that look fundamentally sound than pharmaceutical over the short term.

Over the next week, all pharmaceutical stocks, except Cipla, are likely to fall. The broader market will also lend cues to the sector's stocks next week, especially as investors await the consumer price-index based inflation data for May, due on Monday, and US Federal Reserve's decision on monetary policy, due late on Wednesday.