www.rupeedesk.in
Stocks of most pharmaceutical companies are seen rangebound with a negative bias in the coming five sessions, as regulatory and legal snags being faced by some sector majors may weigh on investor sentiment. Moreover, pharmaceutical stocks will react to cues from the broad market, which may see major activity next week after the Reserve Bank of India's mid- quarter review of the monetary policy for 2013-14 (Apr-Mar) on Monday. Most market participants do not expect the central bank to cut its key policy rate on Monday, while some expect a 25-basis-point reduction in banks' cash reserve ratio. Sun Pharmaceutical Industries' shares, which fell nearly 6% this week, may extend losses, as the company and Teva Pharmaceutical Industries settled a patent suit over the generic of heartburn drug Protonix with Pfizer Inc and Takeda Pharmaceutical Co for $2.15 bln, of which the Indian drug maker will have to pay $550 mln.
We have lowered their earnings per share estimates and price targets for Sun Pharmaceutical, with a warning that its premium to peers may be threatened after the news. Though the settlement amount is much more than what Sun had provisioned, Sun has about 62.6 bln rupees in cash as of Mar 31, 2013. Dr Reddy's Laboratories' stocks, which had hit a lifetime high earlier this week due to a steep fall in the rupee, may see some correction next week, as the rupee has more-or-less stabilized. Dr Reddy's Laboratories' gets more than 60% of its revenues from the US, the world's biggest drug market. This week's closing prices of frontline pharmaceutical stocks, in rupees, on the National Stock Exchange, compared with previous week's closing prices.
