Dr Reddy's, Cipla and other pharma stocks rise up to 10% despite fall in NIFTY50 and SENSEX

Dr Reddy's Labs, Cipla and other pharma stocks are witnessing buying interest today despite a fall in broader markets as investors turn cautious amid rising crude oil prices, which rose above the $100 per barrel mark. Besides this, uncertainty around the US-Iran peace talks also led to weak sentiments.

Dr Reddy's shares rose 7.8% intraday with a day high of ₹1,313 apiece on NSE, while Cipla shares rose 4.7% intraday. Piramal Pharma, Mankind Pharma, Glenmark Pharmaceuticals and other pharma stocks also rose between 3% and 6%.

Dr Reddy's shares rebounded sharply from last week's fall as investors are closely tracking the company for drug approval. Dr Reddy's is awaiting approval for its weight-loss drug semaglutide in the Brazilian and Canada market.

Last week, CNBCTV18 reported that the Brazilian authority rejected Dr Reddy's application for the semaglutide drug due to further technical requirements. Meanwhile, another drug firm, Apotex Inc. has got the approval in the Canadian market ahead of Dr Reddy's Labs.

Why are Pharma stocks on the rise today?

Pharma stock rally could also be supported by weak returns and a consistent fall in broader markets in recent months. But how?

The Pharma sector is considered a defensive industry that offers medicines and healthcare services that are essential regardless of economic conditions. Pharma sector sales and earnings generally remain stable even during the economic slowdown or recession as consumers will cut back on luxury goods like cars and real estate but not on healthcare services.

So far this year, the NIFTY Pharma index has gained nearly 1% compared to an over 7% fall in the benchmark NIFTY50 and SENSEX index.