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What is the story about?
Pharmaceutical stocks remain one of the top investment bets despite concerns over potential US tariffs, according to N Jayakumar, Group CEO and Managing Director of Prime Securities. He said the sector's export-driven nature, relatively low correlation with domestic economic cycles and long-term growth prospects make it an attractive investment theme.
"Pharma is the new tech. Every dip, people will buy pharma," Jayakumar said in an interview with CNBC-TV18.
Jayakumar said he continues to favour pharmaceutical companies across generics, contract research and manufacturing services (CRAM) and contract development and manufacturing organisation (CDMO) businesses.
His comments come at a time when Indian equities have faced sustained pressure. The Nifty and the Sensex fell for five consecutive sessions, with the Nifty declining nearly 2% over the week — its sharpest weekly fall in four months. Concerns over escalating tensions in West Asia, higher crude oil prices and a weaker rupee weighed on investor sentiment.
Why pharma remains a top bet
Jayakumar said the potential imposition of US tariffs on pharmaceutical products is unlikely to alter his long-term view of the sector.
He argued that several large Indian
pharmaceutical companies already manufacture a significant share of their products for the US market, making the sector strategically important to American healthcare supply chains.
"Some of the pharma majors who are big in generics would actually love a 100% tariff because 40% to 70% of their production in the US takes care of US needs," he said.
Jayakumar added that he does not expect tariffs on pharmaceutical products to remain a significant risk over the long term.
"I think the world order is changing... But the reality is, no pharma tariffs can happen even in five years,” he said.
He also highlighted the export-driven nature of pharmaceutical companies as a key advantage. Unlike several domestic sectors, pharma companies can benefit from overseas demand and may be relatively less exposed to domestic economic cycles.
"Pharma still has a future. I think it's not linked, and it's export-driven," Jayakumar said.
Banking, IT may limit index upside
While Jayakumar remains positive on pharma, he believes the broader market may struggle to see a sharp re-rating in the near term because of the concentration of the benchmark indices in financial and technology stocks.
He said banking stocks remain relatively over-owned, while valuations across banks and non-banking financial companies are normalising.
"The index, broadly, is capped out," Jayakumar said, adding that new sectors would need to emerge to drive the next leg of market gains.
According to him, substantial equity has flowed into the financial sector, creating additional lending capacity at a time when private sector capital expenditure remains subdued.
"The short-run problem is that a lot more MSME lending will happen because none of the top balance sheets actually need money," he said.
He believes this could prompt investors to look beyond traditional financials and technology stocks for the next set of market opportunities.
Telecom infrastructure, hard assets also attractive
Apart from pharma, Jayakumar said he favours telecom infrastructure and other hard-asset plays.
He said concerns over disruption in the telecom infrastructure space from new entrants have not played out as many had expected.
"There was a time we used to say duopoly... Then we said Starlink will come and disrupt everything. None of this is happening," he said.
Jayakumar also identified infrastructure linked to data centres as an area to watch, although he acknowledged that the sector faces its own challenges.
Crude oil ticker may not reflect India's actual cost
Jayakumar also offered a contrarian view on the impact of surging global crude oil prices on India. He argued that international crude oil benchmarks may not accurately reflect the actual prices at which countries such as India, China and Russia transact.
According to him, bilateral and barter arrangements have become increasingly important in the global oil market.
"Crude is available, bilateral trades are happening, and the crude oil ticker actually doesn't matter much to India," Jayakumar said.
He estimated that India may be effectively buying crude at around $75 a barrel, plus or minus 10%, despite global benchmark prices being significantly higher.
"The ticker itself has no meaning," he said, arguing that India may be less sensitive to global crude prices than markets have traditionally assumed.
Positive on aluminium, steel and silver
Within the metals space, Jayakumar said he remains positive on aluminium and steel, while also seeing potential in silver.
He expressed a relatively less favourable view on government-owned companies because of the possibility of further government stake sales.
He also said steel companies with strong balance sheets and controlled leverage could remain attractive as the sector consolidates.
Cautious on new-age technology stocks
Jayakumar said he is not particularly bullish on new-age technology companies, especially those that remain loss-making or generate only small profits.
He said investors globally have become less tolerant of companies that are heavily dependent on intellectual property but remain cash-flow negative.
"I don't fancy those. No," he said when asked about new-age technology companies.
With financials and technology stocks facing valuation and ownership-related constraints, Jayakumar's investment strategy favours sectors that are less crowded, export-oriented or backed by tangible assets. Pharma, however, remains his strongest conviction, with the sector's export exposure and strategic importance to global healthcare supply chains underpinning his long-term outlook.
Watch the accompanying video for the full show.
"Pharma is the new tech. Every dip, people will buy pharma," Jayakumar said in an interview with CNBC-TV18.
Jayakumar said he continues to favour pharmaceutical companies across generics, contract research and manufacturing services (CRAM) and contract development and manufacturing organisation (CDMO) businesses.
His comments come at a time when Indian equities have faced sustained pressure. The Nifty and the Sensex fell for five consecutive sessions, with the Nifty declining nearly 2% over the week — its sharpest weekly fall in four months. Concerns over escalating tensions in West Asia, higher crude oil prices and a weaker rupee weighed on investor sentiment.
Why pharma remains a top bet
Jayakumar said the potential imposition of US tariffs on pharmaceutical products is unlikely to alter his long-term view of the sector.
He argued that several large Indian
"Some of the pharma majors who are big in generics would actually love a 100% tariff because 40% to 70% of their production in the US takes care of US needs," he said.
Jayakumar added that he does not expect tariffs on pharmaceutical products to remain a significant risk over the long term.
"I think the world order is changing... But the reality is, no pharma tariffs can happen even in five years,” he said.
He also highlighted the export-driven nature of pharmaceutical companies as a key advantage. Unlike several domestic sectors, pharma companies can benefit from overseas demand and may be relatively less exposed to domestic economic cycles.
"Pharma still has a future. I think it's not linked, and it's export-driven," Jayakumar said.
Banking, IT may limit index upside
While Jayakumar remains positive on pharma, he believes the broader market may struggle to see a sharp re-rating in the near term because of the concentration of the benchmark indices in financial and technology stocks.
He said banking stocks remain relatively over-owned, while valuations across banks and non-banking financial companies are normalising.
"The index, broadly, is capped out," Jayakumar said, adding that new sectors would need to emerge to drive the next leg of market gains.
According to him, substantial equity has flowed into the financial sector, creating additional lending capacity at a time when private sector capital expenditure remains subdued.
"The short-run problem is that a lot more MSME lending will happen because none of the top balance sheets actually need money," he said.
He believes this could prompt investors to look beyond traditional financials and technology stocks for the next set of market opportunities.
Telecom infrastructure, hard assets also attractive
Apart from pharma, Jayakumar said he favours telecom infrastructure and other hard-asset plays.
He said concerns over disruption in the telecom infrastructure space from new entrants have not played out as many had expected.
"There was a time we used to say duopoly... Then we said Starlink will come and disrupt everything. None of this is happening," he said.
Jayakumar also identified infrastructure linked to data centres as an area to watch, although he acknowledged that the sector faces its own challenges.
Crude oil ticker may not reflect India's actual cost
Jayakumar also offered a contrarian view on the impact of surging global crude oil prices on India. He argued that international crude oil benchmarks may not accurately reflect the actual prices at which countries such as India, China and Russia transact.
According to him, bilateral and barter arrangements have become increasingly important in the global oil market.
"Crude is available, bilateral trades are happening, and the crude oil ticker actually doesn't matter much to India," Jayakumar said.
He estimated that India may be effectively buying crude at around $75 a barrel, plus or minus 10%, despite global benchmark prices being significantly higher.
"The ticker itself has no meaning," he said, arguing that India may be less sensitive to global crude prices than markets have traditionally assumed.
Positive on aluminium, steel and silver
Within the metals space, Jayakumar said he remains positive on aluminium and steel, while also seeing potential in silver.
He expressed a relatively less favourable view on government-owned companies because of the possibility of further government stake sales.
He also said steel companies with strong balance sheets and controlled leverage could remain attractive as the sector consolidates.
Cautious on new-age technology stocks
Jayakumar said he is not particularly bullish on new-age technology companies, especially those that remain loss-making or generate only small profits.
He said investors globally have become less tolerant of companies that are heavily dependent on intellectual property but remain cash-flow negative.
"I don't fancy those. No," he said when asked about new-age technology companies.
With financials and technology stocks facing valuation and ownership-related constraints, Jayakumar's investment strategy favours sectors that are less crowded, export-oriented or backed by tangible assets. Pharma, however, remains his strongest conviction, with the sector's export exposure and strategic importance to global healthcare supply chains underpinning his long-term outlook.
Watch the accompanying video for the full show.
/images/ppid_a911dc6a-image-178504310791685788.webp)
/images/ppid_a911dc6a-image-178504206576845782.webp)
