Key Question most investors in Indian equity market asking is
Are Indian PHARMA STOCKS bottommed OUT??
And simple Answer is :- Not Yet.
INDIAN PHARMA STOCKS ARE NOT BOTTOMED OUT YET.
-------
Rationale :-
Yearly ELLIOT WAVE CHART of CNX PHARMA INDEX which is maintained by India's leading stock exchange -National Stock Exchange (NSE)
shows that, Wave c is under progress...with a target at 6,563.
As per Elliot Wave Theory, this ongoing c wave may extend upto 4,960 level, but cannot go below 4,960.
Simultaneous to above technical chart, fundamental analysis of Indian PHARMA stocks reveals following facts...
(1)
Earning Cycle of Indian Pharma companies is yet to bottom out.
Barring few exception, most pharma companies have reported decline in top line and bottom line, alongwith weak guidance for coming quarter.
(2)
Indian Pharma companies with exposure to European market have started to felt aftermath of Brexit, and will require to realien their operation.
(3)
In USA, current regime under Mr. Trump has clear focus on AMERICA FIRST. It is becoming clear that this administration won't mind weak dollar, if it helps in creating new jobs.
USD Dollar Index has broken key level of 95 on downside, and may continue to slide further. This development in currancy market is a challange to export oriented earning of INDIAN PHARMA companies.
(4)
At domestic front, Govt. has started to focus on walfare of weaker section of society. For making health products and health services affordable, Government has slowly but systamatically started putting pricing cap on drugs, medical equipment snd healthcare services.
(5)
Medicines are specislised items, and as per current marketing and manufacturing system, GST might not be helpful in margin improvement of INDIAN Pharma sector.
On the flip side complications of GST implementation - like old inventory, regulatory filing etc. might prove dampner, atleast for one or two quarters.
Like AUTO manufacturer companies, PHARMA Manufacturing companies might have to absorb initial shock of GST imementation, so as to protect dealer's margin.
(6)
These all together are likely to put pressure on earning and margins of Indian Pharma companies, atleast for one or two of quarter.
___
Ending Note:-
While announcing latest quarter result, SUN PHARMA -leading Indian Pharma company has released weak margin guidance. Being an investor caring company, Sun Pharma completed share buy back programe at 800+Inr per share. Since then, share prices are decling with periodic technical bpunces. Current Market Price of share is 460 INR plus, which may go sub 400 level.
More or less similar things are happening at other INDIAN PHARMA companies.
Therefore,
Some more pain left for investors who are already invested into equity of INDIAN Pharma companies. Those, who want to tame fresh exposure should wait fpr some time.
All the Best.
(3)All due care is taken while processing the data. However some minor technical glitch may not be ruled out.
(4) This is posted for Academic purpose only. Any trading decision must be taken in consultation with financial consultant.
Are Indian PHARMA STOCKS bottommed OUT??
And simple Answer is :- Not Yet.
INDIAN PHARMA STOCKS ARE NOT BOTTOMED OUT YET.
-------
Rationale :-
Yearly ELLIOT WAVE CHART of CNX PHARMA INDEX which is maintained by India's leading stock exchange -National Stock Exchange (NSE)
shows that, Wave c is under progress...with a target at 6,563.
As per Elliot Wave Theory, this ongoing c wave may extend upto 4,960 level, but cannot go below 4,960.
Simultaneous to above technical chart, fundamental analysis of Indian PHARMA stocks reveals following facts...
(1)
Earning Cycle of Indian Pharma companies is yet to bottom out.
Barring few exception, most pharma companies have reported decline in top line and bottom line, alongwith weak guidance for coming quarter.
(2)
Indian Pharma companies with exposure to European market have started to felt aftermath of Brexit, and will require to realien their operation.
(3)
In USA, current regime under Mr. Trump has clear focus on AMERICA FIRST. It is becoming clear that this administration won't mind weak dollar, if it helps in creating new jobs.
USD Dollar Index has broken key level of 95 on downside, and may continue to slide further. This development in currancy market is a challange to export oriented earning of INDIAN PHARMA companies.
(4)
At domestic front, Govt. has started to focus on walfare of weaker section of society. For making health products and health services affordable, Government has slowly but systamatically started putting pricing cap on drugs, medical equipment snd healthcare services.
(5)
Medicines are specislised items, and as per current marketing and manufacturing system, GST might not be helpful in margin improvement of INDIAN Pharma sector.
On the flip side complications of GST implementation - like old inventory, regulatory filing etc. might prove dampner, atleast for one or two quarters.
Like AUTO manufacturer companies, PHARMA Manufacturing companies might have to absorb initial shock of GST imementation, so as to protect dealer's margin.
(6)
These all together are likely to put pressure on earning and margins of Indian Pharma companies, atleast for one or two of quarter.
___
Ending Note:-
While announcing latest quarter result, SUN PHARMA -leading Indian Pharma company has released weak margin guidance. Being an investor caring company, Sun Pharma completed share buy back programe at 800+Inr per share. Since then, share prices are decling with periodic technical bpunces. Current Market Price of share is 460 INR plus, which may go sub 400 level.
More or less similar things are happening at other INDIAN PHARMA companies.
Therefore,
Some more pain left for investors who are already invested into equity of INDIAN Pharma companies. Those, who want to tame fresh exposure should wait fpr some time.
All the Best.
Disclaimer:-
(1) CNXPHARMA INDEX data is as received from googlefinanace.
(2) Data is processed to generate hourly EWT wave.
(3)All due care is taken while processing the data. However some minor technical glitch may not be ruled out.
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