Manish Sonthalia of Motilal Oswal AMC cites regulatory approvals as well as reduction in price erosion in the US as reasons for the upmove in pharma stocks
Pharmaceutical stocks have been buzzing in trade in June so far. The Nifty Pharma index is up around 11 percent, while frontline names such as Sun Pharmaceutical Industries, Dr Reddy’s Laboratories, Lupin and
Aurobindo Pharma, among others, are seeing a strong surge.
So, what's driving this upmove? Manish Sonthalia of Motilal Oswal AMC cites regulatory approvals as well as reduction in price erosion in the US as reasons for the upmove. He told CNBC-TV18 that should result in more business for generic pharma companies.
Sonthalia said valuations are now at comfortable levels after the massive selloff earlier this year. “The environment is very conducive now and what were challenges two years ago, could turn out to be opportunities.”
He is quite bullish on the midcap space given the ‘plethora of opportunities’ post the recent correction. "One could pick and choose stocks from this segment and in some cases valuations have halved too."Among sectors, Sonthalia is currently downbeat on the IT space but remains bullish on consumer names, especially in the organised retailing side. "While valuations in some consumer names could be higher, their growth potential may justify them."