Pharma Stocks Outlook
for the week – 06 to 09.09.2016
Mixed; broader market
trend to lend cues
Stock-specific movement is likely in pharmaceutical
companies next week amid lack of fresh triggers. Trend in broader market will lend some cues to the sector.
Benchmark indices are seen positive next week because sentiment remains buoyant after announcement of
new policy initiatives for the construction sector and robust sales numbers reported by
most automobile companies in August. While the broader market is seen positive, the gains in
pharma space are expected to be limited compared to other sectors like infrastructure and banking.
Stocks of Cipla, which hit a six-month high of 587.50 rupees on Aug 31, may consolidate next week after
the recent rally but a sharp correction is unlikely. The bias for Cipla remains firm on optimism
that the company's business restructuring plans will propel future growth.
Stocks of Sun Pharmaceutical Industries have rebounded 4%
during the week. Among mid-caps,
stocks of Ajanta Pharma, which have surged more than 20% in
the last one month, are likely to
continue the upward movement as analysts are positive about
its long-term fundamentals. However,
some bouts of profit booking cannot be ruled out in the near
term. We are positive about Ajanta
based on its continuing outperformance in domestic
formulations and healthy ANDA (abbreviated
new drug applications) pipeline (in the US). To factor in
the faster ANDA approvals, strong execution and better returns.
