Further, with the finance bill hanging fire, pharma and agrochemical segments would be the worst hit. It may be recalled that the budget had proposed to allow an automatic approval to direct investments of upto 74 per cent in these sectors. The market believes that in case the WTO deadline is not met, which is unlikely, the US could clamp more sanctions which would hurt India badly. As a result, most of the pharmaceuticalstock have taken a severe beating in the past few trading sessions and could fall further till the political storm settles down.

Dissaponting results from select pharmaceutical companies has further dampened the sentiment in these counters. Smithkline Beecham Pharmaceuticals, the 40 per cent subsidiary of Smithkline Beecham Plc, reported a disscouraging 28 per cent drop in net profit to Rs 7.96 crore against Rs 11.08 crore for the first quarter ended March, 1999. However, the company reported a growth of 22.15 per cent in its turnover over the corresponding period of last year from Rs 73.61 crore to Rs 89.91 crore. Devaluation of rupee hurt the company'a performance in the first quarter. Competitive pressure resulting in lower prices and additional promotion expenses on its new products has put the bottomline under further stress. Another pharma major, Glaxo is also expected to report a slight drop in its earnings. As a result, the stock has been mauled by the bears in the past few sessions. Among theIndian pharma companies, Ranbaxy Laboratories has suffered a 16 per cent drop in net profit to Rs 48.50 crore on a 6.6 per cent fall in turnover to Rs 362.20 crore in the first quarter ended March, 1999. The company, however, has put these figures as an abberation and expect the current year to be very good. Turnover for the nine-months ended December, 1998 stood at Rs 1064 crore with a PAT of Rs 117 crore.

Pharmaceutical stocks have failed to live up to their reputation of being one of the most insulated and safest sectors. On wednesday, when the political drama reached its peak, stocks like Glaxo, Pfizer and Ranbaxy were hammered either to the lower end of the circuit filter or close to that level. The drop in the values was accompanied by a spurt in volumes. Trading volume in Novartis shot up from around 20,000 shares to around 80,000 shares on the BSE. Volume in Glaxo zoomed from 96,000 shares to over 2.42 lakh shares on BSE alone. According to market sources, some big time operators have even goneshort in some of these scrips. Glaxo, for instance, has lost close to Rs 200 in the past few trading sessions. Since the scrip is trading in the no-delivery period, it attracted a lot of short selling, says a market source. The scrip came out of the no-delivery period on April 13 and will be settled on April 20 on the NSE.

With the pharma and FMCG stocks witnessing a free fall, the time may be ripe for fund managers to take a positive view on these stocks. According to fund managers, with dissapointing performance by a few scrips, only select stocks will witness buying.