Pharma and diagnostics stocks jumped on Wednesday amid renewed fears of Covid outbreaks. As reports of a sudden spurt in Covid-19 cases in China, Japan, the United States of America, the Republic of Korea, and Brazil surface, a meeting on the COVID-19 situation is being held by Union Health Ministry on 21 December. Share prices of Dr Lal PathLabs, Metropolis Healthcare, Vijaya Diagnostic Centre, Thyrocare Technologies, and Krsnaa Diagnostics rallied up to 6% in early trade as investors bet high on these stocks as they see brighter prospects for diagnostics and healthcare businesses amid Covid scare.
“The news of rising COVID cases coming out of China is concerning, we need not panic given our excellent vaccination coverage and track record. We must continue to trust and follow the guidelines set by the Government of India and Ministry of Health & Family Welfare, Government of India”, Serum Institute CEO Poonawalla tweeted on Wednesday. Among diagnostics companies, Vijaya Diagnostic Centre topped the chart by rising as much as 8.4% to hit a high of Rs 461.95 on the BSE. It was followed by Dr. Lal PathLabs stock, which jumped 6.4% to Rs 2,434.70 intraday, while Metropolis Healthcare’s share price gained 4.4% to Rs 1,338.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “The near-term market construct is not favourable for equities. The rising Covid cases in the US, Korea, Brazil, and China is an area of concern. The situation is dire in China. This might impact market sentiments. Moreover, there are no near-term triggers to take the market higher.”
Aside from diagnostics stocks, pharma company and hospital stocks were also trading higher. Max Healthcare Institute and Apollo Hospitals share price jumped around 1%. In comparison, the BSE Sensex was trading 0.5% higher. On NSE, Divi’s Labs and Apollo Hospitals were the top gainers, rising up to 1.5%. Cipla share price also jumped 1.31% on NSE. Note that diagnostics and healthcare stocks lost some momentum this year as demand normalised following Covid-related dislocations. Nifty Pharma index is down 8% YTD.
Dr. Lal PathLabs share price has tumbled over 29% in a year, while Metropolis Healthcare shares and Vijaya Diagnostic Centre stock price has fallen 60% and 18%, respectively, during the same period. However, the Nifty Pharma index was up more than 2% today.
It is worth noting that India has been reporting around 1,200 cases a week with the COVID-19 tally since March 2020 at 4.4 crore. Currently, there are around 3,500 active infections, according to the data, “In view of the spurt in positive cases, it is essential to gear up the whole-genome sequencing of positive case samples to track variants through Indian Sars Cov2 Genomics Consortium (INSACOG) network. Such an exercise will enable timely detection of newer variants, if any,” said a letter to State governments signed by Health Secretary, Rajesh Bhushan on Tuesday.