Financial Daily from THE HINDU group of publications
Tuesday, Jul 01, 2003
Financial Daily from THE HINDU group of publications Tuesday, Jul 01, 2003 |
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Markets
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Commentary Columns - Sensor Healthcare stocks move ahead Suresh Krishnamurthy
THE liquidity driven rally in stock prices continued on Monday without facing any major resistance. The much-expected correction in stock prices did not materialise as the Sensex soared past the levels of 3,600. Resistance did surface towards the end of the day with Sensex retreating from the day's high of 3,632 to close at 3,607. Monday's rally in stock prices was broadbased and a major part of the action was concentrated on mid-cap stocks. The CNX Mid-cap 200 Index, representing stocks with market capitalisation of less than Rs 1,500 crore, surged ahead by 1.75 per cent. In contrast, Sensex gained 0.67 per cent while Nifty gained 0.76 per cent. Major gainers for the day were mainly stocks from sectors such as healthcare, capital goods, fast moving consumer goods and public sector banking. In the healthcare sector, a number of mid-cap stocks upstaged even leading lights of the industry such as Dr Reddy's and Ranbaxy Labs. On Monday, Dr Reddy's and Ranbaxy gained just about 3.5 per cent. In contrast, stocks such as Cadila Healthcare and Panacea Bioted gained 20 per cent. Other stocks such as Divi's Labs, IPCA Labs, Orchid Chemicals and German Remedies gained about 10 per cent. A number of reasons are being attributed for the bull-run in healthcare sector such as the passage of a bill in the US, which reduces impediments in marketing drugs in that country, and the new patent regime that comes into effect in India from 2005. The progress of the monsoon, which is reported to have covered 86 per cent of the country and brought rains that six per cent above normal, gave a fillip to stocks of fast moving consumer goods. Heavyweights such as HLL and ITC stayed firm while stocks such as Henkel SPIC, Tata Tea and Britannia also notched gains. Liquor companies Shaw Wallace and McDowell also firmed up. Stocks of capital goods companies such as Alstom Projects, Crompton Greaves, Tata Honeywell and BHEL were also among the day's gainers. Capital goods stocks have been surging ahead for some time now. The rise in the value of the BL Capital Goods Index has been as impressive as that of the BSE PSU index since the beginning of the year. Stocks of public sector banking companies also surged ahead. Oriental Bank of Commerce, State Bank of India, Bank of India and Union Bank of India stayed firm during the day. The stock of HDFC Bank, a private sector bank, also participated in the rally gaining 4 per cent. The rise needs to be seen in the light of the green signal given for Indian promoters to hold up to 74 per cent in banks.
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