Market Movers: Resurgent Covid brings tailwinds for healthcare stocks

MUMBAI – Bad news for mobility in India is good news for its healthcare sector stocks or at least that is what investors’ perception is.

Shares of healthcare stocks – pharma companies and diagnostic companies – jumped in trade today as the government got into battle mode to stem the spread of the Omicron variant in the country.

The government regulator’s approval of Molnupiravir, which has proven to be effective in the treatment of Covid-19 symptoms, for Sun Pharma sent the company’s stock soaring over 3 per cent in trade. Other drugmakers like Cipla and Dr Reddy’s, who also have an agreement with Merck to market the Covid drug, also saw gains.

Diagnostic stocks were the other beneficiary of the government’s rise in alertness level as investors expect testing to go up in the coming months. Companies like Dr Lal Pathlabs, Metropolis Health and Thyrocare Tech are likely to see a bump up in revenue next quarter.

Eris – The Future Star?
That’s what Motilal Oswal Financial Services is betting as the brokerage firm initiated coverage on shares of Eris Lifesciences with a Buy rating and a price target of Rs 870.

The brokerage firm expects Eris Lifesciences to grow its earnings at the rate of 17 per cent per annum over the next three years as it further makes inroads in an under-penetrated market. Investors quickly onboarded MOSL’s optimism for the company as the stock closed the day with gains of close to 7 per cent.

Another setback for PVR
Just as multiplex owners were hoping for a positive New Year, the Delhi government has thrown water on those plans.

The Capital announced the closure of multiplexes for the foreseeable future to contain the spread of the new variant. PVR, which has a strong presence in the northern Indian market, will be adversely affected by the closure of theatres just as it was hoping to bank on some blockbuster movie releases next quarter. Shares of the company closed nearly 4 per cent, lower reflecting the disappointment of investors.

Inox Leisure, on the other hand, closed flat, but the situation is likely to deteriorate if Mumbai is forced to close down theatres.

So far, Mumbai has stopped short of pulling the trigger, but in such fluid times, investors would not count on getting lucky.