Mumbai: Shares of Indian pharmaceutical companies were among the top gainers on Thursday after the sector was exempted from the new trade tariff regime in the US.
The Nifty Pharma index jumped 2.3%. IPCA Laboratories gained 4.6%, while Lupin, Sun Pharmaceutical and Cipla rose 3-4%
"US exemption of tariffs on the pharmaceutical companies is a big positive for the sector as the overhang around this has been removed," said Siddhartha Khemka, head of research at Motilal Oswal Financial Services.
Khemka expects beaten-down shares of US generic drugmakers such as Dr. Reddy's Laboratories, Zydus Lifesciences and Aurobindo Pharma to gain more.
The pharma index has recovered 7.8% in the past month, but it's still down 8.5% this year against the benchmark Nifty's decline of 1.7%.
Khemka said that he sees growth potential and valuation comfort despite the recent run up, and believes it is still a good time to invest in pharma.
"Our top pick in this space is Sun Pharma, which has more diversified operations," he said.
BNP Paribas said higher tariffs are not completely ruled out for the future on pharmaceuticals.
"Assuming a 10% tariff is imposed on pharma products, we expect the impact to be negligible," said the brokerage. BNP is positive on JB Chemicals & Pharmaceuticals, Sun Pharma and Torrent Pharma.
Param Desai & Kushal Shah, research analysts - institutional research, at PL Capital said India currently levies a 5-10% duty on US imports and has been gradually reducing tariffs on select products over the past few years.
"If this trend continues, the likelihood of a reciprocal tax remains low in the near future," they said.
The Nifty Pharma index jumped 2.3%. IPCA Laboratories gained 4.6%, while Lupin, Sun Pharmaceutical and Cipla rose 3-4%
"US exemption of tariffs on the pharmaceutical companies is a big positive for the sector as the overhang around this has been removed," said Siddhartha Khemka, head of research at Motilal Oswal Financial Services.
Khemka expects beaten-down shares of US generic drugmakers such as Dr. Reddy's Laboratories, Zydus Lifesciences and Aurobindo Pharma to gain more.
The pharma index has recovered 7.8% in the past month, but it's still down 8.5% this year against the benchmark Nifty's decline of 1.7%.
Khemka said that he sees growth potential and valuation comfort despite the recent run up, and believes it is still a good time to invest in pharma.
"Our top pick in this space is Sun Pharma, which has more diversified operations," he said.
BNP Paribas said higher tariffs are not completely ruled out for the future on pharmaceuticals.
"Assuming a 10% tariff is imposed on pharma products, we expect the impact to be negligible," said the brokerage. BNP is positive on JB Chemicals & Pharmaceuticals, Sun Pharma and Torrent Pharma.
Param Desai & Kushal Shah, research analysts - institutional research, at PL Capital said India currently levies a 5-10% duty on US imports and has been gradually reducing tariffs on select products over the past few years.
"If this trend continues, the likelihood of a reciprocal tax remains low in the near future," they said.
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