Stock Market: Pharma announces arrival on street; indices tank on Fed action

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By S Jha

New Delhi, July 27: Trailing the last night UD Federal Reserve decision to hike the benchmark rate by another 25 basis points to take the rates to highest point since 2001, the Indian indices went into tailspin on Thursday, which was also the weekly and monthly expiry of the option contracts.

The US Fed brought the bears in full strength by dropping enough hints that another round of rate hike is also on the card. The Central banks of the emerging nations will have to respond in line of the US Fed decision to defend their sovereign currencies.

The financials predictably cracked under the weight of the mounting fear that the Central banks are not yet done with the rate hikes. In India also the food inflation is on the rise, which made the government to ban the export of the non-basmati rice, while vegetable prices are firm in the retail market.

But the pharma sector announced the arrival on the street in a big way with Cipla leading the show. The pharma sector had reaped the windfall gains after the Covid-19 pandemic and afterwards had gone into the hibernation mode. But the sector was in action on Thursday even while the indices were sinking.

Cipla reported extraordinary set of number in its quarterly result, with the US market swelling the kitty of the pharma giant. The fund managers have begun speculating if the pharma sector is the new IT on the street. Tracking the theme, pharma majors such as Sun Pharma, Aurobindo Pharma, Lupon, Gland Pharma, Divi’s Laboratory shined on Thursday. Cipla, a largecap, rose as much as 12 per cent during the day. Dr Reddy’s Laboratory was much in the demand on the street.

While India is already known as the vaccine capital of the world, the country was hailed during the pandemic as the medicine hub of the world as well. Poly Medicure, Syngene International, Shilpa Medicare, Natco Pharma, and others made handsome gains in the secular rally in the pharma sector.

While Cipla has announced that the US has become a big cash cow for the pharma major, the export-oriented pharma firms will be watched out in the coming days for confirmation if they indeed can replicate the success of the IT firms on the street. In the meantime, the indices appear to have gone into sideways mode with selling pressure coming at higher levels.