Indian Pharma Sector Stocks - It Is All About Rotation

11 авг. 2017 г.

So what's ailing Indian Pharma sector stocks? Those who really looked like on steroids are suddenly behaving like they have swallowed over dose of laxatives. Few environmental changes are to blame,
1. ) Rotation
Yes folks, those who rode it from Rs. 100 a stock to 1500 are taking profit and putting that money to some other sector where they believe market it going to perform well. Look at Reliance, a single stock has gobbled up many thousand crore in its rally. From where that money came to buy such stocks in other sector? Of course some from new gullible SIP investors ( more on that in upcoming post :) ) etc and some from rotation.
2. ) Change In Tone of Governments
Still it's difficult to justify the quantitative effect on Pharma stocks but certainly this is also a factor which will keep on weighing the stocks in future. Many countries are being rhetoric about fixing the drug prices and that is headline risk as well as bottom line risk.
3. ) Too Much Good Has Been Priced In
How much is too much?! ;) That question is never going to have perfect answer in stock market because it's all about psychology. But in general, when anybody look at the chart and say, wow what a rise of few hundred or thousand percent gain ! then it is time to be cautious. Because even though fundamentals are supportive for such rise, market needs confirmation and will wait to digest such meteoric rise.
We had great trades in Pharma stocks like,
Dr Reddy
Cipla
Glaxo
Lupin
Auropharma
Divis Laboratories etc..

But now it is time to pause and let them collapse until they become attractive again !