AS the broader market index Nifty struggles with a monthly decline of -2.06 per cent, Nifty Pharma has stood out by delivering a positive return of 1.44 per cent, reinforcing its status as a defensive sector. While Nifty's performance has been lackluster over the past month, several pharmaceutical stocks have shown resilience, with four companies - IPCA Laboratories (16.11 per cent), Mankind Pharma (12.57 per cent), Granules India (11.16 per cent), and Divi's Laboratories (12.18 per cent) - posting impressive double-digit returns. On the other hand, companies like Sun Pharmaceutical Industries Ltd, Torrent Pharmaceuticals Ltd and many others managed to outperform Nifty 50.
Pharma and healthcare sectors are commonly regarded as defensive due to several inherent characteristics. Firstly, the essential nature of healthcare ensures consistent demand irrespective of economic conditions. Whether in times of prosperity or downturns, people require medical treatments, medications, and healthcare services. Additionally, the non-cyclical nature of these sectors means that their demand remains relatively stable compared to other industries, which are more susceptible to economic fluctuations. Moreover, the inelastic demand for many healthcare products and services ensures steady revenue streams for companies operating in these sectors. Regulatory protections, such as patents on drugs, further safeguard the market position and revenue of pharmaceutical companies. With an aging global population, the demand for healthcare services and medications is expected to continue growing, providing a long-term growth trajectory for the sector. Continuous investment in research and development drives innovation, fostering growth and investor interest even during market downturns. These combined factors make pharma and healthcare stocks a more reliable and less volatile investment option, particularly in uncertain economic times.
Triggers for growth
This story is from the November 2024 edition of Indian Economy & Market.
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This story is from the November 2024 edition of Indian Economy & Market.
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