Trump Reciprocal Tariffs: Pharma shares rise up to 13% on tariff exemption; Gland Pharma, Aurobindo Pharma lead gainers

Trump Reciprocal Tariffs: Shares of Indian pharmaceutical firms with considerable stakes in the US market, including Gland Pharma Ltd, Aurobindo Pharma Ltd, Dr. Reddy's Laboratories Ltd, and Sun Pharma Ltd, experienced an increase of 3%-13% during Thursday's trading session after US President Donald Trump refrained from making specific reciprocal tariff declarations pertaining to the pharmaceutical industry.

Trump unveiled reciprocal tariffs affecting over 60 nations, including India, the European Union, China, and Vietnam, among others.

According to a fact sheet issued by the White House, drugs and various other products, including those already affected by other tariffs, are excluded from the new levies.

However, it's important to highlight that specific tariff announcements by sector were not included in the White House's agenda for the announcements made on April 2. The President has indicated in the past that tariffs on pharmaceuticals, semiconductors, and other industries would be revealed at a later date, although he did already apply a 25% tariff on imports of automobiles and additional auto parts into the US.

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities explained that pharmaceuticals sector gets excluded from individual reciprocal duties but that may become part subject to future duties. This lines brings in some sentimental relief to the sector and today we may see a reasonable amount of positivity in the sector performance. As of now, India charges an approximately 10% tariff on Pharma imports from the US, while the US does not impose any tariff on imports of Indian pharmaceutical items.

Further Dipan Mehta, Founder Director at Elixir Equities Pvt. Ltd. in an interview with CNBC-TV18 said, " I think Pharma has a clear run for the next several quarters or so. And clearly, I think the Trump administration recognized the fact that pharma provides a very important import for us, considering that it keeps healthcare costs lower. From that point of view, I think it's been positive. I would focus on some of the CDMO players.

I think, where the prospects look really good, although they are trading at expensive valuations, but I think growth rates will be higher over there because they have an advantage against the Chinese when it comes to this particular activity within the pharma space. However, my first reading is that it may create opportunities as well, and we'll have to go company by company to understand how these tariffs are playing out for them. And there could be a few surprise winners as well, including textiles, you know; who knows? So, I think this entire earnings season will be quizzing all the management on what they make out of this Trump policy."

Technical Views

On Thursday's session Nifty Pharma surged nearly 4% with Gland Pharma, Lupin, Aurobindo Pharma, Natco Pharma, Sun Pharmaceutical Industries leading the gains. Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One stated that stock prices have seen a strong traction gaining more than 4%. a closing around these levels would be good opening doors for further upside by confirming an Inverse head and shoulder pattern. In the near-term pharma index can extend upmove towards 22,800 - 23,000, on the flip side the bullish gap left around 21,000 will now act as support.

“We are seeing a broad based buying and move mostly driven by frontline space lupin Aurobindo Pharma, Sun Pharma, this positive momentum is likely to continue in the near term,” added Bhosale.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, explained that Nifty Pharma gapped up and tested the neckline of a 37-day bullish cup and handle pattern on the daily chart. For sustained upside momentum, the index must breach and hold above the 21,900-22,000 zone. A successful breakout will drive it towards the next major resistance at 23,413. Traders should watch for strong follow-through buying, as failure to sustain above resistance could lead to consolidation.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.