MUMBAI: Dalal Street was a sea of red on Monday as investors’ sense of security from support from global central banks is steadily fading. Faced with the threat of a new Covid variant and withdrawal of liquidity support by major central banks, investors are raising doubts over the sustenance of the sky-high valuations in equity markets.
However, one stock that appeared immune in the face of the badgering that stocks received today was pharmaceutical major
.
Cipla’s shares surged nearly 4 per cent on a day when the Nifty50 slumped over 2 per cent as investors looked for defensive stocks to hide amid the carnage. Further, Cipla is seen as a beneficiary if the Omicron variant spreads rapidly in India.
The company’s Covid-19 drug portfolio helped its earnings immensely during the second pandemic wave, as sales rose due to a surge in hospitalisations. If the same fate repeats for India due to Omicron, the company could see another fillip to its revenues from accelerated sales of Covid-19 drugs.
A FUTURE OF HOPE
Future Group companies, forgotten by the market for some time, became the center of attention today.
Shares of , , Future Lifestyle Solutions, and Future Consumers were locked in their 20 per cent upper circuits after the CCI said that Amazon’s deal to acquire a stake in Future Coupon was invalid.
That CCI order paves the way for
to go ahead with the Future Group acquisition and provide much-needed relief to the debt-laden company. However, analysts expect Amazon to contest CCI’s order in the court, which means that the slimmer hope that investors of Future Group stocks saw today may dissipate soon.
RETAIL PORTFOLIOS ARE BEING HAMMERED
Retail investors have had a dream run on Dalal Street after the crash of March 2020. Making money has been so easy that application of mind and investing principles have been minimal.
However, the turn in the fortune of the market since November is likely to start pinching the biggest cohort of investors on the land as they see their portfolio turn a deeper shade of red. The market is punishing sectors with rich valuations and foggy earnings outlook. At the top of the list are chemicals, metals, and to an extent, some bulk drug manufacturers.
Portfolios of retail investors are filled to the brim with names from these three sectors, given they were the biggest gainers throughout the bull market till November. As Nifty Metal is inching towards a bear market, chemical stocks are now more than 20 per cent lower from their highs, and bulk drug makers have been in the doldrums for some time. The honeymoon period for the rookie investor is officially over.
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