Mutual funds bet big on healthcare stocks after Trump's tariff pause. Is the danger really over?
Live Events
Mutual funds with highest exposure in health stocks
Returns snapshot
Outlook
(You can now subscribe to our
(You can now subscribe to our ETMarkets WhatsApp channel
Donald Trump 's 90-day pause on reciprocal tariffs announced on April 9, 2025, brought much-needed stability to stock markets and lifted sentiment in the pharma and healthcare sectors, which had been clouded by uncertainty.The pharmaceutical sector found itself in a unique position, having received exemptions in the initial tariff announcements which kicked-in on April 2, though no clarity on what lay ahead. Between April 2 and April 9, the Nifty Healthcare index had declined by over 3%, or nearly 1,300 points.However, the Nifty Healthcare index staged a strong rebound following the pause, rising 7% or around 2,650 points over the remaining 12 trading sessions of the month. This recovery was accompanied by notable institutional activity, with mutual funds increasing their holdings in 11 healthcare stocks in April compared to March.Healthcare was also among the sectors where MF ownership was higher by over 1% versus the sector's weight in the BSE 200 index.According to a Motilal Oswal report, 17 funds were over-owned and MFs weight on the sector stood at 7.6% in April, behind private banks (18.9%), technology (8.3%) and automobiles (8%). Meanwhile, the healthcare sector in BSE 200 stands at 5.4%, the report revealed.Highest MoM buying of 11.43% in April was seen in midcap stock Syngene International . It was followed by Glenmark Pharmaceuticals Dr. Reddy's Laboratories and Laurus Labs where mutual funds added stake by 7.63%, 6.05% and 3.85%, respectively.Others like Lupin, Aurobindo Pharma, Divi's Laboratories, Sun Pharmaceutical Industries, Abbott India, Ipca Laboratories and Biocon also saw mutual fund action towards the buying side.Nine healthcare stocks also went under the hammer and saw a sell-off. These were Zydus Lifesciences Torrent Pharmaceuticals , Max Healthcare Institute, Mankind Pharma, Granules India, Fortis Healthcare, Cipla, Apollo Hospitals Enterprise and Alkem Laboratories.MF selling was highest in Torrent Pharma and Zydus Lifesciences at 8.34% and 4.87%, respectively. The next in the pecking order were Granules, Apollo and Mankind where MFs sold 3.89%, 3.64% and 3.61%. The others saw a sell-off between 1.67% and 0.46%.Sumit Bhatnagar, Fund Manager Equity at LIC Mutual Fund said that the healthcare sector often remains resilient due to the essential nature of its services and products and innovations and an aging population continue to drive demand. However, the potential impact of Trump's tariffs on the healthcare sector is a valid concern in his view and tariffs could increase costs for healthcare companies which could affect their profitability. "These increased costs might be passed on to consumers or could lead to reduced margins for healthcare companies," he told ETMarkets.DSP and Quant top the list with holdings of 11.5% and 11.1%, respectively and are followed by Axis MF (10.4%), Mirae (9.7%), HDFC MF (9.1%) and Sundaram MF (8.4%).The lowest holdings are for SBI MF (5.1%), MOFSL (5.5%) and UTI MF (6.1%).Nifty Healthcare index's 1-year returns stand at 17%, outperforming Nifty which has returned 12% in the same period.MFs continued to show trust on Syngene in April despite a 6% drop in share price over a 1-year period. Meanwhile, mutual funds sold shares in laggards Zydus Lifesciences and Alkem which have fallen 14% and 2% in the past 12 months.Divi's remains the best performer in the pack with 60% returns and MFs added stakes in April (1.13%) and March (2%). Glenmark and Laurus, which also saw significant MF action, have returned robust 44% and 36% returns.Lupin, Abbott, Sun Pharma and Biocon have also given double-digit returns in the same period while IPCA, Aurobindo and Dr. Reddy's have delivered single-digit returns.Mutual funds booked partial profits in stocks like Fortis Health, Max Health, Granules, Mankind and Torrent Pharma whose 1-year returns stand in the range of 21% and 56%. Apollo Hospitals has yielded 18% returns while Cipla has been an underperformer with just 6% returns.The sector is again in the eye of the storm as Trump has signed an executive order to bring the prices for prescription (Rx) drugs in line with other developed nations. The order institutes the Most-Favoured-Nation (MFN) price model for drugs as a ceiling which means the US will pay for drugs at the same levels as the lowest paid by other countries."The policy initiatives, if implemented fully, may lead to increased compliance/operational cost for foreign manufacturers, including those in India. We expect generic pharma to continue to underperform due to uncertainty," Nuvama Institutional Equities said in a note. It prefers Ajanta Pharma, Torrent Pharma and Divi's Lab.HDFC Securities sees the generic companies unlikely having any impact, though it expects Sun Pharma with its specialty business in the US, to see some impact of MFN price ceiling for a few of its products. JM Financial sees over 20% growth visibility for hospitals and CDMO for the next 4-5 years. Amongst the hospitals, it likes Max Healthcare, Aster DM and Fortis while Piramal Pharma and One Source in CDMO.However, UBS expects healthcare to outperform Nifty over the next 12-month period as the Zurich-based brokerage reiterated its positive stance on Nifty, seeing an 8% upside with a target of 26,000. In a note of caution on generic pharma export names, it expects earnings downgrades starting in 2HFY26.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India Gazette
35 minutes ago
- India Gazette
India-US trade deal to increase US' exports to India: Crisil
New Delhi [India], June 23 (ANI): Given that India has much higher tariffs than those imposed by the US, the impending bilateral trade agreement (BTA) -- that would reduce tariffs-- is set to increase the US's exports to India more than vice versa, according to an analysis by Crisil. India would be able to import more energy products, certain agricultural products, and defence equipment, among others, from the US, Crisil said in a 'Quickonomics' report. India, according to Crisil, should be prepared to see more imports from the US under the bilateral trade agreement (BTA). A lowering of tariffs under the BTA would make US goods more competitive in India, it argued. 'This is because India's tariffs are much higher than those of the US, and bringing these down would be advantageous to exporters in the US,' Crisil said. India's exports, however, are unlikely to see a major spike because the focus of the President Donald Trump administration is to reduce its trade deficit with India, and most of India's top exports to the US are already duty-free (before the application of baseline 10 per cent, which is applicable since April 10). Besides, the export potential would also depend eventually on the amount of tariff India faces when compared with other competing nations, Crisil noted. The US has categorically said that it wants to reduce its trade deficit with India (among other nations) and has complained that India's high tariffs and non-tariff barriers have been a hindrance for American companies looking to increase their exports. Even as India had shown its discomfort in allowing US agriculture products to be exported to India, imports of certain agriculture products such as walnuts, pistachios and cranberries could get a fillip as India's share in US exports of these items was relatively low -- at 19.4 per cent, 5.0 per cent and 3.1 per cent, respectively -- in 2024. This contrasts with almonds, where India's share was a hefty 70.5 per cent in 2024 -- one of the US's top agricultural export items to India. Further, with India's aviation sector growing, there is scope to increase imports of civilian aircraft, engines, and parts. According to Crisil, there also seems to be good complementarity in the energy space as the US is a large exporter and India is a large importer of energy commodities. Even though India has a huge opportunity to import crude oil from the US, Crisil said the prospects of increasing crude oil imports from the US would have to be viewed against challenging factors -- such as higher cost of transportation, including the longer transit time. 'The US is a large exporter and India a large importer of LNG, providing a mutually beneficial ground. Here, the synergy seems to be much better than that in crude petroleum as the US is already among the top three suppliers of LNG to India,' Crisil said. 'With favourable factors such as US natural gas prices being more stable than those in the Middle East (India's largest LNG import partner) and long-term contracts being signed between Indian entities and US suppliers, there has been an increase in the import of this commodity from the US,' it added. Defence imports into India could see a rise under the bilateral trade agreement. 'Even as India is trying to increase its defence production and export capabilities, it remains one of the largest arms importers. At the same time, the US is the world's largest arms exporter. While Russia has been India's largest arms supplier traditionally, its share in India's arms imports has come down in recent years. This has created space for western suppliers, led by the US, to step up their sales,' the report said. In fact, in 2023, the US and India launched a bilateral Defence Acceleration Ecosystem (called INDUS-X) to facilitate defence collaboration between the countries. Combining all these opportunities, India's trade surplus with the US is expected to come down -- a major ask of the US, as it has implemented reciprocal tariffs on countries in proportion to the trade surplus. On the contrary, India may see some gains in exports of smartphones, certain pharmaceuticals and labour-intensive sectors such as textiles and gems and jewellery. The US announced reciprocal tariffs on India and a host of other nations on April 2, and then paused the increase for 90 days from April 10 to negotiate trade deals with these countries (for India, the reciprocal tariff was 26 per cent, lower than the tariff on many other Asian peers). During the pause period, a 10 per cent base tariff remains applicable (over and above the existing tariffs) on all countries, including India. India is negotiating a trade deal with the US, called the bilateral trade agreement (BTA) -- the first tranche of which is targeted to be completed by the fall of 2025. (ANI)
Time of India
an hour ago
- Time of India
Amazon's premium beauty push may be a buffer against Trump's tariffs
Amazon's defense against tariffs for its coming Prime Day? Luxury goods. President Donald Trump's tariffs have spurred some Amazon sellers who source products from China and other heavily tariffed countries to bow out of the company's Prime Day, one of its biggest sales events of the year, to protect their margins. Amazon Prime Day is now a four-day shopping event exclusively for Amazon Prime members, taking place this year from July 8 to July 11. The Seattle-based e-commerce company is hoping that recent sales growth in high-margin cosmetics in its Amazon Premium Beauty category will cushion the impact of tariffs on Prime Day sales revenue and consumer sentiment. "Beauty has become, in the past few years, more of an essential item in consumers' minds," even in hard financial times, said Anna Mayo, vice president of NielsenIQ's Beauty Vertical unit. Amazon Premium Beauty was initially shunned by luxury cosmetic players who feared the platform would harm their image when it was launched in 2013. But those days are gone. Now, the online retailer is promoting products from top beauty and haircare brands including Estee Lauder's Clinique, Olaplex and L'Oreal's Urban Decay. During last year's Prime Day event, U.S. shoppers spent $14.2 billion, up 11 per cent year-over-year, according to Adobe Analytics. Top cosmetics brands can charge high prices and often do not offer steep discounts on Prime Day compared with electronics, apparel and home goods. This year, Adobe Analytics expects beauty product discounts to have "milder" discounts of 10 per cent to 17%, whereas electronics deals are expected to range from 14 per cent to 22 per cent off, said Vivek Pandya, lead analyst at Adobe Digital Insights. That, coupled with the ease of shipping small packages of most products, means that Amazon Premium Beauty merchandise has higher margins than other products sold on Prime Day. Amazon "doesn't make a huge margin in most of the categories of stuff that it sells online," said Renee Parker, co-founder of consultancy firm Invinci and a former Amazon executive. "They are making a lot of money on premium beauty products because ... (they're) small and expensive, and you can ship a ton of them." Vitamins and supplements are successful for similar reasons. Amazon Premium Beauty sales gathered steam after the e-commerce giant began clamping down on counterfeits and top beauty companies needed new ways to reach customers, said Alfonso Emanuele de Leon, a beauty industry veteran and partner at FA Hong Kong Consultancy. Amazon was previously viewed as a pariah by luxury beauty brands because of the cheap merchandise on the website, but is no longer perceived that way, said Emanuele de Leon. 'HUGE ACCELERATION' Sales at Amazon Premium Beauty rose by nearly 20 per cent to $15 billion between April 2024 and April 2025, outpacing the 14 per cent growth for beauty products outside the specialized e-commerce store, according to NielsenIQ. It also outpaced the year-over-year growth of 5 per cent for online store sales in the first quarter, NielsenIQ said. L'Oreal Chief Executive Nicolas Hieronimus said during the company's annual meeting in April that having products on Amazon led to a "huge acceleration" in expanding its U.S. market share. Estee Lauder has launched 11 brands on Amazon's U.S. site since March 2024. More than 75 per cent of Estee's finished goods sold in the U.S. originate from the U.S. or Canada and are therefore protected by existing trade agreements, Roberto Canevari, Estee Lauder's global supply chain executive vice president, said at a conference in June. Lauren Gordon, vice president of Amazon at Estee Lauder, said that Prime Day and Amazon's other "high-traffic shopping moments" give the company a chance to "attract both new and existing customers." Melis del Rey, general manager for health and beauty for Amazon U.S. stores, said her team has been "very proactive" in working with premium brands to determine tariff impacts. "At a high level, most of the premium brands' sourcing strategies are local, and therefore, the (tariff) impact is less imminent," del Rey said. Amazon Premium Beauty is an invite-only program for brands shipped and sold by Amazon and third-party sellers. The department has grown to more than 10,000 products, and brands' eligibility is determined on a case-by-case basis. Brands like Dyson and Estee Lauder's Aveda pay an extra 15 per cent commission to Amazon for every website sale, and the third-party seller approach allows major brands to control pricing and inventory. Adding prestige brands including Unilever's Dermalogica has helped the company compete with beauty retailers Ulta Beauty and Sephora, which is owned by LVMH , and also attract older, higher-income shoppers at a time when TikTok Shop is scooping up younger customers.
Time of India
an hour ago
- Time of India
Canadians poured billions into US bonds in April despite Trump's tariffs scare — only to see $58 billion vanish
Canada's Record US Bond Buying in April April's Bond Market Shake-Up Hits Canadian Holdings Live Events US–Canada Interest Rate Gap Shapes Investment Flows FAQs (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Even though there was mounting irritation at US President Donald Trump because of his tariffs and speculation about turning Canada into the "51st state," Canadian investors continued to quietly buy US government bonds in April, as per a to Fortune, Canadians purchased a net $9.2 billion of US government bonds in April, which was the highest monthly rise since November the latest data from the Treasury revealed that the value of Canada's overall holdings dropped by about $58 billion that same month, which was the largest swing for any of the top 20 foreign owners of US debt, reported decline in value came amid April's massive bond selloff, which might have driven the US president to halt his reciprocal tariffs, according to the report. Fortune wrote in its report that, "Long-term yields, which spike when bond prices fall, have remained stubbornly elevated with the Federal Reserve—unlike other central banks around the world—patient to cut interest rates."ALSO READ: 37 hours to target: Inside the US B-2 bomber's Fordow mission — complete with snacks, a microwave, and a toilet A senior vice president and investment strategist at US Bank, Rob Haworth, pointed out that, 'You've got this gap emerging with the Fed on hold and the Bank of Canada cutting rates, along with everyone else,' as quoted in the the Bank of Canada has cut rates by 225 basis points over the past nine months, which includes the 25-point cuts in January and March, the Fed has only cut rates by 100 points from September to December last year but has held rates unchanged so far in 2025, as per to the central bank's rates, the 10-year US Treasury yield was 4.38% as markets closed on Friday (June 20), while Canada's was at 3.30%, reported explained that Higher interest rates in the United States can make Treasuries appealing to Canadians and other foreign investors, if they can effectively hedge the risk presented by a weakening US dollar, as per the to Fortune report, foreign investors held a little more than $9 trillion worth of Treasuries at the end of April, which was slightly below the record set in March. Haworth pointed out that, "The decline in the dollar this year has been much more pronounced than any offloading of Treasuries," reported also explained that a slowdown in trade affects the flow of dollars first, as greenbacks are used in fewer transactions and changes in the allocation of Treasuries, often held as investments or bank reserves, happen much more slowly, Fortune reported. Haworth said, 'There's probably still some fundamental pressure as we suss out where trade and tariffs end up,' as quoted in the invested a net $9.2 billion, the biggest monthly total since November long-term yields, uncertainty over tariffs, and the Fed holding rates steady all played a role.
