“Dr Reddy’s Laboratories has been in a corrective phase in the last couple of months, but this entire down move just seems to be a corrective phase within an uptrend,” Ruchit Jain, Lead Research, 5paisa.com, said.
Short-term traders can buy the stock for a possible short-covering move which could take the stock towards 1275 levels, suggest experts. The stock reversed losses after hitting a low of Rs 852 on 22 March 2023. The stock closed at Rs 1223 on 19 October which translates into an upside of over 40%.
There are some sectors which are able to face bears in a better way. The reason, the operating matrix of those sectors is such that rising interest rates and other economic headwinds have little impact on their working because they are taking care of a need which is very basic in nature and if spending has to be done on that, it cannot be postponed. Pharmaceutical companies come into that category. This is not to say that there was a phase of almost 7 years that pharma stocks became under-performers. That was a very different reason, most of which have been taken care of. So there is a good chance that this time pharma stock will be able to tackle bears in a much better way.
Nifty 50 index closed down 0.71 per cent at 19,671 points, while Sensex lost 0.83 per cent including ten other indices traded in red, , stock market, nifty, sensex, Intraday, investment, pharma stocks, PSU Bank, losses to investors, IPO launch, cipla, dr reddy, oil stocks, icici prudential, biocon
Both, in terms of bottomline and stock price performance, pharma stocks had been under pressure for a long time. Partly this under performance was due to over valuation at which these companies were trading since 2015. Also stocks came in the overowned category for both the institutional and retail investors portfolio. Last but not the least, close to 2014, USFDA inspections became both more in numbers and stricter, many companies which assumed that they can take care of anything, got a rude shock. After all the head and tailwinds, many companies which had changed their focus, fruits are visible in terms of them moving into new markets and better financials.