Pharma stocks on mutual funds' radar post price correction

Domestic mutual funds (MFs) have taken a liking to pharmaceutical stocks, following a steep fall in the latter's prices. While they expect the pharma sector to undergo headwinds, they are taking a contrary view on select stocks with an investment horizon of two to three years. Sun Pharmaceutical, Apollo Hospital Enterprise, Dr Reddy's Laboratories, Aurobindo Pharma and Fortis Healthcare were among the most-bought stocks in the month of May by fund managers. Last month, Divi's Laboratories, along with Aurobindo and Fortis Healthcare, were the top picks. S Naren, chief investment officer (CIO) at ICICI Prudential MF, says, "India's pharmaceutical companies have been under intense scrutiny from the US Food and Drug Administration (FDA) over the past few years. This has led to considerable price erosion. With popularity of this sector at a multi-year low, the ownership of stocks in the sector saw a steep decline. We believe that, at the current juncture, the (share of the) sector is largely inexpensive. Rather, the valuation has corrected about 25 per cent if one looks at the price-to-earnings ratio. We see there will be a revival in earnings and buying the space at the current phase might make it a good contrarian investment bet for 2-3 years."  Astrology and Numerology Trading Tips