Shares of major pharmaceutical companies are seen gaining next
week as market players are likely to invest in defensive sectors owing to expectations of
a volatile broad market. Pharmaceuticals and fast moving consumer goods are usually seen as
safe havens when the broad market is expected to be down.
Market today saw continuous selling as rupee hit a record low at
62.03 against the dollar
following the Reserve Bank of India's curbs on foreign exchange
outflow and expectation
of the US quantitative easing programme being tapered. Today,
National Stock Exchange's 50-share Nifty and BSE's 30-share Sensex crashed by
over 200 points and 700 points respectively.
Pharmaceutical stocks will continue to remain strong with the
market falling today. The shares of companies such as Aurobindo Pharma Ltd and Jubilant
Lifesciences Ltd could be affected due to the rupee touching a record low against the
dollar. Pharma companies usually earn a big part of their revenue in dollars and a fall in
the domestic currency, while bad for others could be a boon for the drug makers.
A silver lining to today's bearish markets was a decision coming
out of the Prime Minister's Office where a high-level meet was held with finance
ministry officials regarding foreign direct investment in brownfield pharma projects.
While 100% FDI is allowed in Greenfield pharma projects through
automatic route, it was decided that government approval is necessary for brownfield projects. Economic Affairs Secretary Arvind Mayaram said the
current pharma FDI policy will apply to pending proposals. This could be seen as a
positive development for companies having pending FDI proposals like Stride Acrolabs Ltd,
which is seen gaining some momentum.
