“The depreciation in rupee is going to help almost all the players, especially the large players who have big presences in the US. So that includes Sun Pharma, Dr Reddy, Zydus Lifesciences, Lupin, Aurobindo Pharma, and the likes and maybe some of the CDMO players with exposure to the US as well,” he said.
Dr. Reddy’s and Zydus Lifesciences are Elara Securities’ top picks. They expect significant upside potential for these stocks, driven by expectations that remain below the companies’ achievable performance levels. As a result, earnings upgrades are expected for 2025-26 (FY26) and 2026-27 (FY27), in these names.
The rupee’s depreciation typically benefits export-oriented sectors such as pharma, IT, auto ancillaries, and textiles.
While these companies often hedge their currency exposure for six to 18 months, a weaker rupee against the US dollar provides sustained advantages for their operations. This trend is expected to enhance margins and deliver positive outcomes in the coming quarters.
The rupee lost its small early gain and dropped by 2 paise to 86.55 against the US dollar in early trade on January 15. The rupee hit an all-time low of 86.6475 earlier in the week. The dollar index eased to 109.24, nearly 1% below its multi-year high earlier this week.
Rupee depreciation often raises concerns, but it is not always harmful to the economy. In fact, a weaker rupee can support domestic industries and boost export competitiveness.
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Elara Securities believe that the Indian economy remains robust, with a strong fiscal position, stable capital flows, and is one of the best growing economies in today’s world.
While current market volatility is largely driven by uncertainties surrounding a potential regime change in the US with the incoming Trump administration, and uncertainties about the kind of policies that new regime will adopt this volatility is expected to persist briefly.
Pathiparampil expects volatility to ease in the next three to four months, after which the focus will shift to the economy’s fundamentals.
Also Read | US dollar likely to stay strong for a long time, says Goldman Sachs
