Pharma Stocks Outlook for the week -04 to 08.07.2016
(Positive next week; Dr Reddy's may gain more)
( www.rupeedesk.in )
The positive momentum in stocks of pharmaceutical companies may
continue next week due to
improved sentiment as no fresh regulatory issues have surfaced in
past few weeks. In fact, a number of companies have come out with statements
that the US Food and Drug Administration has not made any critical observations
relating to non-compliance of good manufacturing practices at their plants in the
recent inspections. On technical charts, too, the trend looks firm for pharma
companies. Last week's gains in (Nifty 50) pharma index are a good sign. It
could rise to 11350-11380 zones, and if it breaks above these levels on the
higher side, then we can see some 6-8% more upside. The sector has been reeling
under stress for over a year as regulatory issues at manufacturing units of
many companies have affected earnings. However, there is a hope that things
will start improving now.
If you see, these days most companies are saying that no Form 483s
have been issued to their plants in recent inspections by US FDA. Companies
like Dr Reddy's and Sun Pharma have said they have taken remediation measures
and will invite US FDA for re-inspection. This has improved the sentiment. Sun Pharmaceutical
Industries had said earlier that it will request the US FDA to re-inspect its
Halol unit, which got warning letter in December, by June-end.
In May, Lupin said the US FDA had cleared its Mandideep and
Aurangabad units. On Thursday, Strides Shasun said its Bengaluru unit had cleared US FDA
inspection. Alembic Pharmaceuticals also said on Thursday that its Panelav unit
has cleared US FDA inspection. JB Chemicals and Pharmaceuticals said earlier this week that US FDA had cleared its
Panoli unit.
Among midcaps, Alembic Pharma, Glenmark Pharmaceuticals, and Bliss
GVS Pharma are seen
trending on a stronger note. Glenmark could see 8-10% rise in the
next couple of weeks. In pharma, would advise buying on dips. Select large-caps will rise but
mostly the upside will be driven by
midcaps.