The pharma sector is glowing with optimism over strong growth prospects, attracting a flurry of investors to buy into stocks belonging to the space. It is the strong buying on account of the same optimism that has lifted the Nifty Pharma index to an all-time high of 22,587.95 on August 21.
With this, the Nifty Pharma index has surged over 10 percent in the past month, strongly outperforming the Nifty 50's less than 1 percent upmove.
At 1.08 pm, the Nifty Pharma index was trading 0.8 percent higher at 22,546.45 on the NSE.
Gains in the sector were led by large caps Divi's Laboratories and Dr Reddy's Laboratories along with others like Glenmark Pharma, Zydus Life, and Ipca Labs--all of which were up 1-4 percent.
In addition to the strong growth outlook for the sector, comfortable valuations offered by several pharma names, especially those in the midcap space are the biggest driver behind investors' bullishness.
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Also, changing dynamics within the pharma space as companies upped their research and development game to foray into complex, low-competition drugs in the US and strong domestic growth are supporting sentiment for drugmakers.
Several renowned market experts are also expecting the pharma sector to come to the forefront now. Veteran investor Sushil Kedia also sees upside potential in mid-cap pharma names, largely due to their growth prospects over the next six months.
Unmesh Sharma, head of institutional equities at HDFC Securities, also believes that investors should look at fairly valued large caps and defensives like pharma.
On top of that, despite some moderation in earnings growth on year, most pharma companies still managed to deliver a beat with their Q1 results, further strengthening the case for strong buying within the sector
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