⚕️Sectoral Analysis: Nifty Pharma⚕️

#NIFTYPHARMA #InvestmentIdeas #InvestingUniversity

Pharmaceutical firms were impacted by rising cost pressures for the third consecutive quarter in Q4FY2022. Raw material availability has been influenced by China-related challenges (particularly the energy crisis), resulting in prolonged increases in input prices. This was exacerbated by container shortages at ports, resulting in higher freight prices.

Furthermore, as markets around the world opened up, the amount spent on marketing and advertising was close to what it usually is. This, along with higher raw material and shipping costs, put pressure on margins, which caused OPM(Operating Profit Margins) to drop by 220 bps year over year.

🌱 Fundamental reasons for nifty pharma outperformance 🌱

⚈ Indian pharmaceutical companies are in a better position to take advantage of opportunities because they are competitive around the world and have a big share of the market in most places.
⚈ Long-term opportunities in the US, where specialty/complex generics (like biosimilars) and injectables are becoming more popular.
⚈ New opportunities in the API space would be key growth drivers in the medium to long term. In the short term, however, pricing and cost pressures in the US could be temporary headwinds.
⚈ Variables, such as a focus on specialty/complex products and growing prospects in the API arena, would be major growth drivers.

🌟 Even though the fourth quarter of the fiscal year 2022 (Q4FY2022) was bad for pharmaceutical companies because of rising raw material and shipping costs, Pharma Sector can still be a good sector to invest.

📈 Technical Analysis 📈

⚈ The Pharma Index has been in a decline for the past 8 months and is currently trading below its 50,100, and 200 days EMAs.
⚈ For the previous eight months, the index has also been trading in a downward channel, the breakout of which will determine the index's future trend.
⚈ Recently, it has also found support from the channel's lower trendline.
⚈ Price is following a trendline on daily charts, any closing above that will lead to a sharper upmove.

💰 Accumulation range for long-term investors: Rs 11,200-10,600.

🌟 Short-term traders:
💰 Entry: Above 12,155 (30 mins closing)

🎯 Target 1: 12,748
🎯 Target 2: 13,180

🌟 Some good Pharma companies to invest in:
1. Divis Labs
2. ZydusLife
3. Glenmark
4. Dr Reddy Laboratories
5. Cipla
6. Apollo Hospital