Mumbai: Shares of pharmaceutical companies were the top performers in a weak market on Friday due to a rush to own defensives amid economic uncertainty and strong results by some of the drug makers recently.
The Nifty Pharma index gained 3.5% as against the 0.3% decline in the Nifty on Friday. Mid-cap shares in the sector were the top gainers with Laurus Labs gaining 18% after the company’s first-quarter profits jumped 10 times. Neuland Laboratories, Unichem Lab, Panacea Biotec, Torrent Pharma, Shilpa Medicare, Gufic Biosciences and Ajanta Pharma gained between 8% and 12%.
“June ’20 quarter earnings performance too is rosy for the majority of them,” said Jimeet Modi, CEO, Samco Securities. “It can be well construed that when bad news cannot take stock prices lower, nothing else can! Therefore, pharma space looks resilient and has a higher chance of inching upwards in the short to medium term.”
In the last five trading sessions, Nifty Pharma index has rallied 9% as against 1% drop in the Nifty.
Analysts expect the rally to continue despite premium valuations in various pockets.
“Notwithstanding the near- term disruption, we see significant structural benefits for the industry over the long term, with the expansion of the formal market, the resilience of demand, consolidation of market share and cost efficiencies, which augur well for premium valuations” said Bansi Desai, analyst, HDFC Securities
Earlier this week, Dr Reddy’s Laboratories posted a 12.59% drop in net profit at ₹579.30 crore for the quarter ended June 30 from the same period a year ago. But, the market cheered the earnings as it was above expectations.
AP
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