Feeling feverish for hot stocks? Nifty Pharma might be your cure! This basket of India’s top medicine makers is like a multivitamin for your portfolio, offering growth, innovation, and a sprinkle of risk. But before you dive in, remember that due diligence is the best antibiotic against bad investments. Research, analyse, and consult your financial doc before hitting the “buy” button! 

In this blog, discover how to analyse Nifty Pharma stocks through factor-based investing methodology.

What is the Nifty Pharma Index?

The Nifty Pharma Index is a sectoral index that reflects the behaviour and performance of the Indian pharmaceutical sector. Launched in 2005, it includes 20 pharma stocks.

The Nifty Pharma index is calculated using the free float market capitalisation method with a base date of January 1, 2001, and a base value of 1000.

Factor Based Analysis of Nifty Pharma Stocks 

In this analysis, let’s focus on three essential factors – momentum, value, and quality – to evaluate Nifty Pharma stocks.

Here’s a breakdown of each factor:

  • Momentum Factor 

Think of investing in momentum stocks like a care race. A fast car (high-momentum stocks) speeds ahead, while a slow car (low-momentum stocks) lags. The momentum factor strategy involves betting on winners (fast cars) to keep winning and losers (slow cars) to stay behind. Investors buy strong-performing stocks and avoid weak ones.

  • Value Factor 

Picture this: a sale catches your eye, and you spot a fantastic lamp at a fair price. Now, apply that idea to the stock market. This strategy checks if a stock is reasonably priced, just like you would with the lamp.

  • Quality Factor 

Quality factor investment strategy is like building a sturdy home with top-notch materials. Investing in high-quality stocks is similar, focusing on companies with strong financials, reliable management, and sustainable growth. Just as quality raw materials ensure a durable home, these factors aim for a resilient investment portfolio.

The Nifty Pharma Stocks are rated from 1 to 5 stars, with 1 being the lowest and 5 being the highest.

Factor-Based Analysis of Nifty Pharma Stocks

NiftyPharma StocksValue FactorMomentum FactorQuality Factor
Abbott India Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐
Alkem Laboratories Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Aurobindo Pharma Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Biocon Ltd.⭐⭐⭐⭐⭐
Cipla Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Divi’s Laboratories Ltd.⭐⭐⭐⭐⭐⭐⭐
Dr.Reddy’s Laboratories Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Gland Pharma Ltd.⭐⭐⭐⭐⭐⭐⭐⭐
GlaxoSmithKline Pharmaceuticals Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Glenmark Pharmaceuticals Ltd.⭐⭐⭐⭐⭐⭐⭐⭐
Granules India Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Ipca Laboratories Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Laurus Labs Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Lupin Ltd.⭐⭐⭐⭐⭐⭐⭐
NATCO Pharma Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Pfizer Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Sanofi India Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐
Sun Pharmaceutical Industries Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Torrent Pharmaceuticals Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Zydus Lifesciences Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐

Note: The above pharma stock data is from February 27, 2024. The lists of pharma stock provided above are purely for educational purposes. These are not stock recommendations. Consult your financial advisor or do your own research before investing.

Conclusion

In conclusion, exploring the Nifty Pharma sector involves understanding its dynamic stocks through a factor-based investing approach. Investors can navigate this pill-making machine by analysing momentum, value, and quality factors. Before making investments, either seek advice from your financial advisor or conduct thorough research on your own.

FAQs

When did the Nifty Pharma index Launch?

The Nifty Pharma was launched on July 01 2005.

Which Pharma stocks have the highest weightage in the Nifty Pharma Index?

Sun Pharmaceutical Industries Ltd has the highest weight of 25.47% in the Nifty Pharma Index as of February 26 2024.

How often is the NIFTY Pharma index rebalanced?

The Nifty Pharma Index is rebalanced on a semi-annual basis.