In 2020 so far, even as the Sensex has fallen 23 percent, the BSE Healthcare index has gained 13 percent. Moreover, the index has risen 36 percent from its March 23 low as India pharma companies gain centre stage in the fight against novel coronavirus, or COVID-19.
According to a recent report by JM Financial, "Post COVID, market movements have led to renewed interest and focus on pharma stocks. Technical factors like low weights, investor apathy, and under ownership have contributed to the sharp outperformance of the sector. However, for the current rally to be real and the stocks to sustain recent gains, earnings have to turn supportive for the sector."
In the charts below, we depict how each sector is performing during this crises, the leading performers in the pharma pack, and the sector's increasing weightage in the Nifty.
In 2020 so far, 17 pharma stocks in the BSE Healthcare index have gained over 25 percent. Stock like IOL Chemical and Pharmaceuticals and Opto Circuits has gained 109 percent and 86 percent, respectively.
As demand shifts towards the pharma sector, its weightage in the Nifty also start ticking up from 10-year lows.