Pharma Stocks Outlook: Down; Sun Pharma in focus

[K.Karthik Raja]

Pharma Stocks Outlook: Down; Sun Pharma in focus

Shares of pharmaceutical companies will continue their slide next
week, with Sun Pharmaceuticals being an exception. Sun Pharma looks
good with resistance at 1,150-1,170 rupees next week. Today, the stock
hit a low of 1,077 rupees, where it found strong support.
In a weak broad market, fund managers favour Sun Pharma as it has
limited downside and hence becomes a part of their index management.
Certain index dedicated funds or sector funds choose Sun Pharma as
a defensive bet when the broad market is down.
All other major pharma shares are seen sideways next week with a
negative bias.
Cipla has support at 180 rupees and resistance at 200 rupees while
GlaxoSmithKline Pharmaceuticals has support at 875-900 rupees and
resistance at 950-975 rupees.
Ranbaxy today ended at a crucial resistance level and hence is
seen
sideways with support at 365-370 rupees next week.
Dr. Reddy's Laboratories continues to look weak. Support for the
stock is seen at 500 rupees and resistance at 550 rupees.
Among mid-cap pharma shares, Glenmark Pharma looks weak and is seen
down with support at 465 rupees. If it breaks this level, it can go
down up to 430 rupees.
IMS Health has projected a 5% revenue growth in 2008 in the US drug
market, down from 6.5% in 2007.
This is bound to reflect on generic exports of top Indian companies
going forward, while it is already reflecting on share prices of drug
companies.
However, companies with contract research and manufacturing
services like Divi's Laboratories and Dishman Pharma will score over
the conventional integrated pharmaceutical companies like Dr Reddy's
and Ranbaxy.

Friday's closing share prices, in rupees, of leading pharmaceutical
companies on National Stock Exchange, compared with a week ago:
.
Company Feb 8 Feb 1 %
Change
.
Cadila Healthcare 246.90 256.85 (-)
3.9
Cipla 194.65 196.40 (-)
0.1
Dr Reddy's Laboratories 516.05 527.05 (-)
2.1
GlaxoSmithKline Pharmaceuticals 927.35 855.50 (-)
8.4
Pfizer 640.00 638.45
0.2
Ranbaxy Laboratories 381.70 359.25
6.2
Sun Pharmaceutical Industries 1,119.10 1,119.00
0.1
.
BSE Healthcare Index 3633.61 3642.71 (-)
0.2
Nifty 5120.35 5317.25 (-)
3.7
Sensex 17464.89 18242.58 (-)
4.3