NEW DELHI, Jan. 15 -- Ever since the lockdown back in March 2020, the Nifty Pharma index has shown remarkable recovery. The fact that valuations were at their nadir after a nearly five-year squeeze also helped. The pandemic showed the sector's resilience with the Nifty Pharma index gaining 63% over the past year. This is strikingly higher than the Nifty 50 index's about 16% gains.
But even while there are tailwinds from the pandemic such as increased spending on medicines, the sector faces a valuation check in the coming quarters. That's because earnings have to show better momentum.
"While Nifty Pharma has generated 60% returns in the past one year, we believe strong earnings momentum is needed to sustain the pharma rally," said analysts...