The Hindu Business Line : Defensive buying keeps select pharma in green

According to Mr Mathew Easow, of matheweasow.com, world over the pharma stocks are considered defensive as the market players cling onto the tag and buy them as long as overall market is falling. "It is interesting to note that the reverse play, however, rarely happens in pharma counters. When the market rises, valuations of these stocks seldom fetch the kind of premiums the frontrunners do", he observed.

Mr Ajit Day of Dayco Securities said this is because the pharmaceuticals including bulk drugs do not face turbulence the business cycles of the commodities. "The demand of drugs is generally considered steady; hence fluctuations in fundamentals are relatively more predictable," he added.

According to analysts, the valuations of domestic pharmaceuticals stock are currently news driven - be it ANDA filings, new generic product launch or litigation over patent infringement or acquisition of products or facilities.

Brokers pointed out that these counters had not participated in the market rally so far and under-performed the benchmark indices.

The Sun Pharma stock, which is trading around 18 per cent below its 52-week high, today moved up by over a per cent. Aurobindo Pharma progressed 2 per cent. Aventis gained 2.26 per cent while Wockhardt was also finished gainer.

Sun Pharma, is among the four domestic companies, considered to be intending buyers for US generic majors Andrx Pharmaceutical Inc and Watson Pharma. Apart from its overseas acquisition plan powered by proceed of it FCCB issue, proposal at home for merging Phlox Pharma with it is also providing positive trigger, Mr Devarsh Vakil of Anagram Stockbroking observed.

Aurobindo has filed 5 DMFs and 2 ANDAs for the US markets. It has filed 22 22 EDMFs/COs for EU markets. Similarly, ANDA and EU filings related triggers in case of Wockhard are also at play for the stock.

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