PERM ban minimal for IT revenue, pharma margin cap at 7%: Kotak Neo

US PERM ban has minimal impact on Indian IT revenues; pharma trade margin cap limited to 7%: Kotak Neo

Mumbai, October 9

Speaking exclusively with ANI News in Mumbai on Friday, Chouhan addressed market concerns surrounding the immigration move, emphasising that the market's fears were overblown.

"We need to separate the immediate business impact from the long-term immigration concerns," Chouhan noted. "PERM is primarily a pathway to permanent residency and not a prerequisite for every H-1B visa employee to continue working. More importantly, reports indicate that these companies account for 2 per cent to 3 per cent of total PERM applications filed. It is something which is not going to impact revenue immediately, and that is why we are of the view that these IT companies are trading higher."

Driven by resilience in the IT sector, Indian equity markets witnessed a strong rebound on Friday, recovering from the previous session's steep 1,000-point plunge in the BSE Sensex to open 400 points higher.

Chouhan attributed the broader market recovery to falling US bond yields, reduced global exposure to AI-related stock volatility, and stable domestic market fundamentals.

Turning to the pharmaceutical sector, Chouhan welcomed the central government's clarification to cap trade margins at 30 per cent on MRPs for non-scheduled and anti-cancer drugs, which has led to positive gains across healthcare and hospital stocks.

Clarifying early market misgivings, he explained, "Earlier it was expected that the effect of this particular cap on the selling MRP of cancer drugs was expected somewhere close to 20 per cent. But now, after this specific clarity, we are of the view that it should be between 2 to 7 per cent kind of impact and not 20 per cent. Barring any new developments from the Supreme Court on Monday, we can see gradual upward activity."

Outlining his expectations for the upcoming trading sessions, Chouhan emphasized that valuations have stabilized near crucial historical support zones.

"Investors can enter into the market with a long-term view," he advised. "If there is an investment view, then we should look for investing in large-cap companies at these levels and more on dips."

Chouhan projected a well-defined range for the benchmark index over the near term. "22,150 is going to act as major support, below that we can expect 21,750. If it survives above these levels, then again the market can revisit the levels of 23,000. So, 23,000 and 22,150 should be the range for the market for the next week."

— ANI