The Nifty Pharma index surged over 4 percent in trade on February 3, with all constituents trading in the green and Cipla and Sun Pharma hitting fresh highs in intra-day deals.
The rally in the sector was on the back of the COVID-19 vaccination drive continuing in full swing. The sentiment was also lifted after Finance Minister Nirmala Sitharaman set a historic precedent by allocating the highest budgetary allocation for healthcare, with a 137 percent year-on-year increase. For FY21-22, a total of Rs 2.23 lakh crore has been proposed to be allocated for healthcare and well-being sector versus Rs 94,452 crore in BE20-21.
Cipla, Sun Pharma and Torrent Pharma rose over 5 percent each in intra-day deals. Meanwhile, Dr Reddy's, Divi's Labs, Cadila Health and Lupin added 2.5-5 percent.
"Nifty pharma consolidated for more than 5 months after it doubled from its March low of 6,343. We expect nifty pharma can give a run upto previous highs of 13,476. We if look at the results reported by the pharma company all are in line with the expectation and even some are better than the expectations, the USA and the domestic market has done well for Indian companies in Q3FY21 while API growth momentum looks weak this quarter," said Yash Gupta, Equity Research Associate at Angel Broking.
He added that some stocks like Ajanta Pharma, Sun Pharma and Lupin have reported better than expected numbers in Q3FY21 while Dr Reddy's, Granules and Alembic have reported numbers in line with market expectations.
Gupta expects a rally in Nifty Pharma from 12,500 to 13,500-14,000 in the next couple of months. He has a buy call on Cadila Healthcare with a target of Rs 557.
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