Pharma Stocks Outlook for the week – 26 to 30.09.2016
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In range; Glenmark may witness profit booking
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Stocks of pharmaceutical companies are likely to trade range bound next week after the recent gains in the sector. Glenmark Pharmaceuticals, which has risen 12% in the past one month, may witness some profit booking. The overall bias for pharmaceutical sector remains positive, particularly due to favourable valuations of large caps. Regulatory compliance issues at a number of manufacturing units of pharma companies have hampered growth in the last couple of years, especially in the US. However, fresh regulatory concerns have not emerged recently, which has lifted investors' sentiment. Improvement in domestic sales in August also provided some support. According to data from market research firm AIOCD-AWACS, India pharma market grew 14.7% on year in July as against a growth of 9.7% in June led by growth in sales of anti-infective and respiratory drugs. Growth in anti-infective, respiratory and anti-malarial drugs in August was due to rise in seasonal ailments but performance of most other therapeutic areas was stable. Thus, sustainability of overall growth numbers beyond the next two months remains uncertain. On technical charts, the trend for Sun Pharmaceutical Industries and Aurobindo Pharma is seen positive. Though there could be some profit booking in Aurobindo Pharma after it rose 7% in one week, the trend remains firm. Volatility is expected next week in the broader market due to expiry of the derivatives contracts on Thursday.
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