Summary of this article
Nifty Pharma rallies despite market weakness
The Nifty pharma index gained nearly 3.5 per cent over the past five sessions, outperforming Nifty 50, which fell 1.3 per cent during the same period.
Could an India-US trade deal boost pharma exports?
Analysts say optimism is high that a trade agreement will ease tariff concerns, especially after the US-EU trade deal suggested lower-than-expected tariff rates.
Are strong Q1 earnings driving sentiment?
Major players including Cipla, Torrent Pharma, Laurus Labs, and Dr Reddy’s posted strong growth despite pricing pressures in the US. Analysts expect resilient margins and healthy guidance to sustain momentum.
What role do strategic investments play?
Companies are deploying cash reserves for acquisitions, investing in overseas subsidiaries, and manufacturing expansions. Moves by Sun Pharma, Laurus Labs, Torrent Pharma, and others signal long-term growth plans.
Is investor preference shifting to defensives?
With global uncertainty and delayed trade talks weighing on markets, investors are rotating toward safer bets like pharma and FMCG.
The Nifty Pharma extended its winning streak for the fifth consecutive session on July 29, 2025. The 20-constituent index, which tracks the performance of the pharma sector, advanced nearly 3.50 per cent over the past five sessions. Meanwhile, benchmark Nifty 50 declined 1.30 per cent during the same time frame.
Leading the gains in the session on July 29 were Granules India, Abbot India, and JB Chemicals and Pharma, all three gaining between 5 per cent and 6 per cent. Torrent Pharma and Gland Pharma too rose between 3 per cent and 4 per cent each, while Aurobindo Pharma, Biocon, Natco Pharma, Ajanta Pharma, Laurus Lab, Zydus Life, Divi’s Labs, and Lupin gained between 1 per cent and 3 per cent each.
The rally in pharma stocks has come amid global headwinds, including concerns over the potential US tariffs on Indian pharma exports ahead of the August 1 tariff deadline. The sector has remained relatively stable and continued to outperform benchmark Nifty 50.
While Nifty Pharma has rallied about 4.70 per cent over the last one month, Nifty 50 has delivered a negative yield of 2.70 per cent. Over a span of six months, Nifty Pharma rallied more than 9 per cent, while Nifty 50 surged 7.20 per cent.
Why Pharma Stocks Are Rising
Here are the reasons analysts cite for the rally in pharma stocks amid an otherwise subdued market:
Expectations Of Favourable India-US Trade Deal
Investors are betting that the long-awaited India-US trade agreement could benefit Indian pharmaceutical companies, given their significant export exposure to the US market.
According to UN COMTRADE data, the US imported pharmaceutical products worth $12.73 billion from India in 2024, accounting for roughly 6 per cent of its total pharma imports. India supplies both finished formulations and active pharmaceutical ingredients (APIs) to the US.
Says Vinod Nair, head of research at Geojit Investments: “Optimism is building around the possibility of a favorable India-US trade deal, especially after the trade deal between the US and European Union (EU) suggested lower-than-expected tariff rates. This could help ease uncertainty around Indian pharma exports.”
Any easing of trade barriers or reduction in tariffs could strengthen India’s position further in the US healthcare supply chain.
Strong Q1 Earnings and Guidance
The sector’s recent rally can also be attributed to strong corporate earnings in Q1 FY26.
Manasvi Garg, a Securities and Exchange Board of India- registered investment advisor (Sebi RIA), CFA, and CEO of Moneyvesta, said, “Most pharma companies either met or beat expectations for the quarter ended June 2025, led by healthy domestic demand and steady international sales despite pricing pressures in the US.”
Cipla reported a 4 per cent year-on-year (y-o-y) increase in revenue and 10 per cent growth in net profit for Q1 FY26. Torrent Pharmaceuticals posted 11 per cent growth in revenue and 20 per cent in profit. Laurus Labs delivered a revenue growth of 31 per cent and net profit growth of a massive 1,154 per cent. Dr Reddy’s Laboratories reported 11 per cent revenue growth and a 1.85 per cent gain in net profit.
Ajit Mishra, senior vice president, research, Religare Broking, said: "Pharma majors have reported strong growth so far, supported by strong domestic and export performance. Companies have issued optimistic guidance, anticipating continued margin strength and healthy revenue growth. Overall, resilient margins and steady execution have reinforced investor confidence, positioning the sector for sustained near-term momentum."
Nair added that stronger future guidance from leading pharma companies, many of which have exceeded expectations, is further driving positive sentiment in the sector.
Strategic Deployment Of Cash Reserves
Several pharma companies have deployed their cash reserves in expanding their presence in global markets. Nair noted that the sector’s outlook has improved due to strategic use of cash reserves for acquisitions and in-licensing.
In July 2025, several such Indian pharma companies were in news for this. Dr Reddy’s Laboratories invested Rs 565.40 crore in its Russian subsidiary, Dr Reddy’s Laboratories LLC, for a 45.19 per cent equity stake. This was part of the Rs 600 crore fund infusion approved by the Board in November 2024.
Laurus Labs was allotted 531.77 acres of land in Anakapalli district by the Andhra Pradesh state government to set up Laurus Pharma Zone (LPZ) for pharma manufacturing. The company plans to invest Rs 5,630 crore and create 6,350 jobs in three phases over eight years. This land allotment is a key step in its future expansion plans.
Sun Pharma incorporated a new wholly-owned subsidiary, Sun Pharma (Hainan) Company Limited, in China and also acquired Checkpoint Therapeutics, a US-based oncology / immunotherapy company, in a $355 million deal.
Torrent Pharmaceuticals, acquired a controlling stake in JB Chemicals & Pharmaceuticals for approximately Rs 25,689 crore in a two-phase deal. Glenmark Pharmaceuticals acquired the Abbreviated New Drug Application (ANDA) for Acetylcysteine injection from Aspen Pharma of the US.
Mankind Pharma expanded internationally by establishing new subsidiaries in Sri Lanka and Russia, licensing cancer immunotherapy Sintilimab for the Indian market, and integrating Bharat Serums & Vaccines (BSV).
Rotational Shifts, Defensive Bets
Typically, in times of uncertainty or stress, investors tend to reallocate their investments into more defensive bets like FMCG and pharma.
Garg said the recent market rally also signals a clear shift in investor preference toward safer and more stable sectors amid global uncertainty. “Investors are rotating into defensives like pharma and FMCG, which tend to perform better during periods of market volatility,” he added.
