Pharma Stocks
Outlook for the week – 22 to 26.12.2014
( www.rupeedesk.in )
Stock-specific trading is
expected to continue in stocks of frontline pharmaceutical companies
next week due to lack of broader
market triggers.
There is no key cause that would
trigger any sectoral movement in the pharma space for next
week. Stocks will be tracked on
the basis of any company-specific news. The markets will also
be watching out for important government
announcements including that on the bulk drug
policy, expected to be out soon.
Therefore some selling could be
seen in shares of Dr Reddy's Laboratories Ltd and JB Chemicals
& Pharmaceuticals Ltd, which
are exposed to the sudden devaluation of the Russian rouble. The
selling could continue till
clarity is reached on how much hit the companies have taken on
account of the Russian currency's
fluctuation. Our rough estimates suggest that every 10% fall in
Russian currency vs dollar
affects the earnings of JBCPL (JB Pharma) by 4-5% and the situation
may not be as grim for Dr
Reddy's.
Given that the movement has been
very volatile and that the Russian government will take steps
like hiking interest rates and
others to safeguard their economy, we believe that the plunge could
be arrested and should not impact
the FY2016 numbers. The Panacea Biotec Ltd's stocks are
likely to trade positively next
week after today's upward jump on news that the company has signed a drug development pact
with a US drug maker Rising Pharmaceuticals Inc.
