Pharma Stocks Outlook: Seen firm next week amid volatility

[B. Karthick]

Pharma Stocks Outlook: Seen firm next week amid volatility
Saturday, Aug 23


Shares of pharmaceutical companies are seen up next week amid
volatility in the broad market.
This week, the BSE Healthcare index was marginally up by 0.3%,
while the benchmark Sensex was down 2.3% because investors preferred
pharmaceutical shares as a safe bet.
This trend is likely to continue next week.
More than frontline stocks, it is the shares of mid-cap companies
like Glenmark Pharma and Piramal Heathcare that look attractive.
Glenmark's base business, excluding the drug discovery business,
is discounting 2009-10 projected earnings 18 times, while Piramal
Healthcare is discounting 2009-10 expected earnings 13 times.
Among frontline shares, Sun Pharmaceutical Industries is fairly
valued and is seen flat, while the upside in Dr Reddy's Laboratories
is likely to be capped.
On the charts too, Dr Reddy's Laboratories shares are seen flat.
The stock is likely to get support at 570 rupees and face resistance
at 610 rupees.
Sun Pharmaceutical Industries is firmly in the bull grip, with
resistance seen at 1,520 rupees.
Technically, Glenmark is seen flat with support at 640 rupees and
resistance at 680 rupees, while Piramal Healthcare can by a good buy
at 285-295 rupees.
Ranbaxy is seen up, with support at 510 rupees and resistance at
540 rupees.
Cipla may continue to remain range-bound, with support at 225
rupees and resistance at 245 rupees.
There are global concerns over rising inflation and the
pharmaceutical sector is one of the sectors that is insulated from it.
Therefore, pharmaceutical shares would be preferred in a volatile
market.

Closing prices, in rupees, of leading pharmaceutical shares, on
National Stock Exchange today, compared with a week ago:

Company Aug 22 Aug 14 %
Change

Cadila Healthcare 321.80 322.10
(-) 0.1
Cipla 237.40
234.05 1.4
Dr Reddy's Laboratories 585.10 589.15
(-) 0.7
GlaxoSmithKline Pharmaceuticals 1,143.45 1,130.00
1.2
Pfizer 582.70
580.55 0.4
Ranbaxy Laboratories 522.55
499.40 4.6
Sun Pharmaceutical Industries 1,452.30 1,452.55
(-) 0.1

BSE Healthcare Index 4297.64
4281.96 0.4
Nifty 4327.45 4430.70
(-) 2.3
Sensex 14401.49 14724.18
(-) 2.2

End

B.Karthick
Research Analyst