Nifty Pharma jumps 5% as US exempts reciprocal tariff on pharma goods

Pharma-linked stocks traded higher after US President Donald Trump imposed a 27 per cent 'discounted reciprocal tariff' on India, exempting pharmaceutical goods. Nifty Pharma jumped 4.9 per cent to the day's high of 21,996.6.

 

All 20 Nifty Pharma constituents settled in the green. Among others, Ipca Laboratories was up 4.59 per cent, Lupin was up 4.19 per cent, Cipla was up 3.28 per cent, Sun Pharma was up 3.41 per cent, Natco Pharma was up 4.06 per cent. 

 

As per the White House official website, some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States.  Also Read: Pharma stocks surge as Trump's 27% tariff on India exempts sector 

"According to The Wall Street Journal on April 2, the pharmaceutical sector has been excluded from the tariffs announced by the Trump administration. While it is unclear whether this is a short-term or medium-term arrangement, we would view it as positive for the sector if pharmaceuticals were not targeted by tariffs," said Citi in its note. 

 

Echoing similar view, Anirudh Garg, partner and fund manager, Invasset PMS said, "Pharma exclusion in tariff is a major relief, since Indian pharma supplies over 40 per cent of the US’ generic drug demand."

 

The US on Thursday, Indian Standard Time (IST), announced 'reciprocal tariffs' on all imports from India and other nations, calling the move “kind reciprocal." Calling India’s tariffs “very, very tough," Trump said he was imposing 27 per cent tariffs on all imports from India — half of what India imposes on the US products

 

Additionally, America imposed 10 per cent base tariffs on all its trading partners. However, there is still no clarity on whether this will be levied on the exempted category.  "We wait for more details and note that higher tariffs are not completely ruled out for the future on pharmaceuticals," said brokerage firm BNP Paribas.  It added: Assuming a 10 per cent tariff is imposed on pharma products, we expect the impact to be negligible. With the sector exempted from reciprocal tariffs currently, we expect a relief rally for the Nifty Pharma Index, after its 11 per cent year-to-date (Y-T-D) decline.