The NSE Nifty Pharma Index slipped into losses in June for the first time in three years, driven by declines in index heavyweights.
The 10-stock gauge dropped more than 11 percent so far this year and 7 percent month-to-date, according to Bloomberg data. It's also set to post the second straight month of losses.
Sun Pharmaceutical Industries Ltd., Dr. Reddy's Laboratories Ltd., Cipla Ltd. and Piramal Enterprises Ltd.—which together constitute 61 percent on the Nifty Pharma Index—fell between 2 percent and 12 percent so far this month.
That's on account of increased regulatory checks by the U.S. Food and Drug Administration, slower-than-anticipated ramp up in specialty business and subdued domestic operations of the Indian drugmakers, according to Amey Chalke, pharma analyst at HDFC Securities.
Still, analysts expect the pharmaceutical companies to enter July in a bullish mode as the gauge has gained during the month in eight of the last 10 years.
“The pharma index is entering a major support zone of 7,400-7,350 from where the last leg of move broke out in 2014 driving the index to a lifetime high of 14,020.70 in April 2015,” independent technical analyst Rahul Randeria told BloombergQuint. “In the current scenario, the index can give a pullback rally toward 8,300 in the next four to five months with a strict stop loss of 7,350.”
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