Pharma Stocks Outlook for the week – 29.02.2016 to 04.03.2016
(Stock-specific
trend likely; Budget in focus)
( www.rupeedesk.in )
The
pharmaceutical sector is expected to witness stock-specific
movement
next week, with the Union Budget for 2016-17 (Apr-Mar) on
Monday
being the key focus for the market.
The
pharmaceutical industry wants Finance Minister Arun Jaitley to
announce
higher tax benefits for research and development, reduce excise
duty
on active pharmaceutical ingredients to 6.0% from 12.5% currently,
continue
with sops for special economic zone and increase allocation for
healthcare.
If
deduction on R&D (Research and Development) expenses is increased
to
250% from 200%, we will see positive movement in pharma stocks.
Any
indirect tax measures pertaining to APIs (active pharmaceutical
ingredients)
will boost sentiment for API-manufacturing companies.
Apart
from the Budget, there are not many fresh triggers, and hence
stock-specific
movement is likely. Companies getting product approvals
in
the US are expected to gain. US FDA (US Food and Drug
Administration)
approvals and trend in currency markets are currently the
key
drivers for pharma.
The
bias for the rupee remains weak due to global economic concerns,
and
the trend is seen continuing unless there are some positive surprises
in
the Budget relating to fiscal deficit outlook. Among the largecap
stocks,
Sun Pharmaceutical Industries is expected to continue its rise
towards 915 rupees in the near term