Healthcare Stocks Rise: Shares of healthcare service providers 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 December, 21.
Among the individual stocks, Vijaya Diagnostic Centre surged 8 per cent to Rs 461.95 on the BSE in intra-day trade today. Dr Lal PathLabs soared 6 per cent to Rs 2,434.70, followed by Metropolis Healthcare (up 5 per cent at Rs 1,342) and Thyrocare Technologies (up 3 per cent at Rs 630.30).
Besides these four stocks, IOL Chemicals & Pharmaceuticals, Supriya Lifescience, Panacea Biotec, Vimta Labs, Glenmark Pharmaceuticals and Granules India from the S&P BSE Healthcare index were are p in the range of 4 per cent to 12 per cent on the BSE. In comparison, the S&P BSE Sensex was down 0.22 per cent at 61,564.
“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.
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.”
However, in past one year, most of these stocks have underperformed the market by recording negative returns, as compared to 9 per cent rise in the benchmark index. The contribution of covid and allied business to total revenue of these companies has declined substantially in September quarter, as compared to previous year quarter (Q2FY22).
While Q1 FY22 saw the highest contribution to revenue coming from RT-PCR testing and COVID allied tests like IL-6 and D-Dimer, it also significantly impacted the non-COVID portfolio due to nationwide mobility restrictions.
Post the second half of Q2FY22, the instances of COVID-19 infections started declining meaningfully and contribution of COVID-19 testing to overall revenue tapered as also the realizations due to price caps introduced by various states for RT-PCR tests.
Aside from diagnostics stocks, pharma company and hospital stocks were also trading higher. Max Healthcare Institute and Apollo Hospitals share price jumped around 1 per cent. In comparison, the BSE Sensex was trading 0.5 per cent higher. On NSE, Divi’s Labs and Apollo Hospitals were the top gainers, rising up to 1.5 per cent. Cipla share price also jumped 1.31 per cent 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 per cent YTD.
Dr. Lal PathLabs share price has tumbled over 29 per cent in a year, while Metropolis Healthcare shares and Vijaya Diagnostic Centre stock price has fallen 60 per cent and 18 per cent, respectively, during the same period. However, the Nifty Pharma index was up more than 2 per cent 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.
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