As most sectors' indices languished in the red during the afternoon session on February 6, the Nifty Pharma index emerged as the top sectoral gainer.
Pharma shares have been rallying sharply as the investors buy into the optimism surrounding the sector. Since January 28, the Nifty Pharma index has surged 5.5 percent in trade, settling in green for six of the past seven sessions.
According to international brokerage Investec, the US generics have no further room for economic deterioration. Further, any tariffs on India or potential onshoring in US would be counterproductive and could increase the prices for generics.
However, at the current juncture, the economics haven't improved enough for the ongoing supply squeeze. If US President Donald Trump's threats of tariffs are implemented, the sector could see a major re- rating due to worsening supply squeeze.
Furthermore, a favourable USD/INR and potential China tariffs favor the Indian pharma sector. In the sector, Investec highlighted Aurobindo Pharma, Dr. Reddy's Labs, and Cipla as its top picks.
Other beneficiaries for Trump's tariffs could include pharma players such as Lupin, Gland Pharma, Marksans Pharma, IPCA Laboratories, Zydus Lifesciences, Sun Pharma, and Glenmark Pharmaceuticals.
At 11.40 am, the Nifty Pharma index had trimmed some of its morning losses to trade 0.5 percent higher compared to the previous session's closing price. Index constituents such as Abbott India, Zydus Life and Torrent Pharma were leading the gains, rising up to 6 percent in trade.
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Abbott India shares extended their gains from the previous session, as investors rushed to enter the stock after its better-than-expected earnings show for the quarter ended December. The company reported a 16 percent year-on-year rise in net profit for the quarter at Rs 360.78 crore, from Rs 310.98 crore net profit reported in Q3 of the previous financial year.
Zydus Lifesciences reported a 30 percent jump in its consolidated net profit of Rs 1,023 crore, primarily on the back of strong sales across domestic and the US markets. The company had reported a net profit of Rs 789 crore in the same quarter last year.
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