Pharma Stocks Outlook: Weak sentiment next wk; Dr Reddy's in focus

[B. Karthick]

Pharma Stocks Outlook: Weak sentiment next wk; Dr Reddy's in focus
Saturday, Jul 19

Surge in the broad market is likely to reflect weak sentiment on
the defensive shares of pharmaceutical companies next week.
We expect Dr Reddy's Apr-Jun earnings Monday to set the tone for
drug company shares next week.
However, Cipla, which announced below-expected net profit of 1.4
bln rupees due to foreign exchange losses, could remain subdued next
week.
The stock has support at 200 rupees on charts and could see a
slight pullback, due to the Apr-Jun earnings.
Dr Reddy's could see some buying next week as traders are seen
swapping from their positions in Ranbaxy shares, following the
uncertainty over the U.S. probe into Paonta Sahib facility.
The shift has already begun and the trend will continue next week.
However, Daiichi open offer for Ranbaxy shares opens Aug 8 and
investors may intend to hold on until then.
Agarwal cautioned it would be prudent to avoid fresh positions in
Ranbaxy from now on.
In the mid-cap segment, Glenmark and Divi's Laboratories may
witness buying, though they are expensive in terms of price multiple.
Sun Pharmaceutical will remain range bound with support at 1,150
rupees.
The broad market is seen volatile with positive bias next week,
and hence pharmaceutical shares could remained subdued as foreign
exchange losses are seen playing spoilsport in Apr-Jun earnings.

Closing prices, in rupees, of leading pharmaceutical shares, on
NSE Friday, compared with a week ago:

Company Jul 18 Jul 11 %
Change

Cadila Healthcare 301.55 314.00
(-) 4.0
Cipla 215.10
210.50 2.2
Dr Reddy's Laboratories 662.80
648.50 2.2
GlaxoSmithKline Pharmaceuticals 1,117.05 1,114.55
0.2
Pfizer 551.90 567.10
(-) 2.7
Ranbaxy Laboratories 436.90 532.15
(-)17.9
Sun Pharmaceutical Industries 1,298.10 1,317.05
(-) 1.4

BSE Healthcare Index 3990.85 4129.94
(-) 3.4
Nifty 4092.25
4049.00 1.1
Sensex 13635.40
13469.85 1.2
End

B.Karthick,
Research Analyst.