GOLDEN RULES FOR TRADING

Pharma Stocks Outlook for the week – 25 to 29.01.2016 Some rebound likely; Glenmark earnings eyed

Pharma Stocks Outlook for the week – 25 to 29.01.2016
Some rebound likely; Glenmark earnings eyed

Stocks of pharmaceutical companies may witness some rebound next week after the
recent sharp fall, but the upside is likely to be limited. Volatility is expected due to the
derivatives contracts expiry Thursday. Though some recovery is expected, there is not
much in the pharma space, the Nifty Pharma index has fallen below the crucial
support of 11200 and hence the trend remains weak. Most of the large cap stocks are
expected to trade range-bound in the coming week. Investors will keep an eye on
earnings of Glenmark Pharmaceuticals that will be released on Thursday.

Glenmark's consolidated net profit in Oct-Dec is seen nearly doubling to 2.22 bln
rupees from 1.15 bln rupees a year ago. Net sales are expected to rise 12% to 19.01
bln rupees. The company's sales are going to be driven by the US market, as business
in emerging markets remain under pressure due to currency headwinds and prevailing
economic crisis. Glenmark has halted sales to Venezuela since November due to
aggravating economic crisis and capital controls imposed on transferring money out
of the South American country. Stocks of Glenmark, which fell over 9% this week,
are likely to trade range-bound next week. Biocon's earnings released on Thursday
were slightly below expectations due to limited growth in the biopharmaceutical
products segment.

Strong growth in research services, good presence in insulin space and
commencement of insulin facility in Malaysia may boost the company's performance.
Key risks to our assumptions are slowdown in the biopharma segment and delay in
receiving regulatory approvals for its biosimilar products in developing markets.
Overall the broader market is likely to see some recovery but weak crude oil prices
and concerns over the Chinese economy may cap gains. Next week, investors globally
will be eyeing monetary policy decision of the US Federal Reserve.