Pharma a safer space: R Jain

Rajesh Jain of Pranav Securities is of the view that entire pharma space is safer place.

Jain told CNBC-TV18, "I think the pharma sector has the advantage of not being over owned and to that extent in the event of further market come off you will not see severe selling pressure particularly from the foreign investment component of the market. Aside of that we have also seen the pharmaceutical sector not give too much in terms of topline growth so the headline numbers there were not very strong as a result of which it was a sector not in fancy."

He further added, "I think the Ranbaxy-Orchid Chemicals episode has bought to the forth the potential that lies in terms of further M&A and restructuring play within the sector and just as Mr. Gujral was mentioning that the upmove in Ranbaxy is also a signal that there could be some catching up to do as far as the other big Indian pharma majors are concerned like Cipla or Dr Reddy’s Laboratories. Take a combination of all these things and you have players like Opto Circuits and all which are looking at global export markets on pharmaceutical products."

"I think the entire pharma space becomes relatively safe haven at a time when you are suffering the brunt for a slowdown in the domestic off takes of a lot of consumer goods and at the same time currency could be changing the equations for a lot of export oriented as well as import intensive businesses here. So pharma becomes a safe haven from all these three aspects and you also have the headroom, potential there which will not be spoiled by selling by overweight in funds." 

Disclosure: It is safe to assume that analyst and his clients may have an interest in the stocks/sectors discussed.