Pharma stocks rally on buzz about new Covid variant, travel stocks sink

Huge gains for Cipla, Alkem Labs and Dr Lal Path, even as IndiGo, Chalet Hotels and IHC tank

The heavily-mutated coronavirus variant detected in South Africa hampered shares of companies that benefit from travel, while benefiting those in the healthcare sector. Multiplex chain PVR and the country’s largest airline InterGlobe Aviation saw their shares tumble 10 per cent each. In the hotels space, Chalet Hotels and Indian Hotels fell 14 per cent and 11 per cent, respectively, on worries that the new variant could put a stop to travel once again. On the other hand, healthcare stocks shot into limelight once again. Pharma majors Cipla, Alkem Laboratories and diagnostic chain Dr Lal PathLabs each rose 7 per cent.

“Investors have dumped travel -sensitive stocks while focus was shifted towards the pharma sector amid growing concerns over the new variant with higher mutations,” said Vinod Nair, Head of Research at Geojit Financial Services.

This was in contrast to what has played out during the most part of the year, where get-out-of-home stocks have been lapped up by investors on optimism that things were reverting back to pre-pandemic days.

A similar story played out in other Asian markets as well where airlines and other travel stocks across Asia saw the biggest slide. Japan Airlines, Korea’s Korea Asiana Airlines and Australian national carrier Qantas Airways saw their shares sink more than 5 per cent each.

Market players said the trade activity on Friday was largely momentum and sentiment based. “Investors have taken the top-down approach to begin with. It is too early to be certain that all travel and leisure stocks will be hit and all healthcare stocks will benefit. It remains to be seen what immigration controls or localized lockdowns get implemented if the new virus spreads rapidly,” said an analyst.