Nifty Pharma index hits a new high as investors lap up defensives

economictimes.indiatimes.com:

healthcare companies gathered steam with the Nifty Pharma hitting an all-time high on Monday on account of investor appetite for the so-called defensive investment themes.Analysts said the recent surge in pharma shares is part of a catch-up rally as many of them have not participated in the broader market upmove in recent years. The Nifty Pharma Index jumped 1.56% on Monday to close at 15,479.25 as against the 0.4% advance in the benchmark Nifty.

While the pharma index has beaten the Nifty so far in 2023, its outperformance has only widened since July 20 — when the Nifty came close to the milestone of 20,000 — after which the index has struggled to maintain its bullish moves. The Nifty has fallen close to 2% since then, while the Nifty Pharma index gained 8.3% in this period.

Analysts said the rally in the pharma sector is also driven by improvement in the sector's business outlook. Sun Pharma, Zydus Life, and Torrent Pharma are analysts' top picks.

Stocks such as Abbott India, Cipla, Dr Reddy's Lab, Torrent Pharma, Neuland Lab, Ajanta Pharma, Syngene International, and Alkem Laboratories hit all-time highs in the past week. «Pharma is the best pick supported with stable forex revenue even if the market turns defensive as the industry valuation can be re-rated further with the earnings outlook for the next 1-3 years is forecasted to be robust,» said Vinod Nair, head of research at Geojit Financial Services.