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Healthcare stocks surge on RBI liquidity measures

RBI has said that to boost provision of immediate liquidity to ramp up covid-related healthcare infrastructure and services in the country, an on-tap liquidity window of Rs50,000 crore with tenors of up to three years at the repo rate is being opened till 31 March 2022. (REUTERS)Premium
RBI has said that to boost provision of immediate liquidity to ramp up covid-related healthcare infrastructure and services in the country, an on-tap liquidity window of Rs50,000 crore with tenors of up to three years at the repo rate is being opened till 31 March 2022. (REUTERS)

  • BSE Healthcare index surged 3% to close at an all time high. Among the gainers, Lupin climbed 13.55%, Aurobindo Pharma 6.5%, Sun Pharmaceuticals 6%, Cadila Healthcare 5.66%, Alkem Lab 3.7%

Indian healthcare stocks including drug makers, hospitals and laboratories gained on Wednesday after the Reserve Bank of India (RBI) announced a special liquidity window to ease lending to sectors participating in tackling the covid crisis.

BSE Healthcare index surged 3% to close at an all time high. Among gainers, Lupin climbed 13.55%, Aurobindo Pharma 6.5%, Sun Pharmaceuticals 6%, Cadila Healthcare 5.66%, Alkem Lab 3.7%, Metropolis Healthcare 2.3%, Glenmark Pharma 2.7%, Dr Reddy's Lab 2%, Apollo Hospitals Enterprises Ltd gained 5%, Wockhardt 3.3%.

"We believe these measures are first in the series of the relief measures to be announced by RBI and more should come from RBI/Govt as the situation evolves," an analyst said on a condition of anonymity.

Overall the measures announced by the central bank are proactive and will ensure funds for vaccine makers, diagnostics and healthcare companies, he added.

According to Ajit Mishra, analyst at Religare Broking, the pharma pack has been consistently doing well for the last one year and we expect the prevailing trend to continue. The pandemic-led demand combined with the easing of overhangs related to the US FDA and pricing pressure has triggered a noticeable surge across the board.

"We do not see this demand phasing out anytime soon. Besides, we may see a renewed push towards the healthcare infra development which would further benefit the pharma industry. However, investors should be selective now after the phenomenal run and accumulate the stocks in a staggered manner," Mishra adds.

On Wednesday, the RBI governor said that to boost provision of immediate liquidity to ramp up covid-related healthcare infrastructure and services in the country, an on-tap liquidity window of Rs50,000 crore with tenors of up to three years at the repo rate is being opened till 31 March 2022.

Under the scheme, banks can provide fresh lending support to a wide range of entities, including vaccine manufacturers; importers/suppliers of vaccines and priority medical devices; hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines, and covid-related drugs; logistics firms, and also patients for treatment, the statement added.

“The three year facility, which the banks can advance is a good measure to immediately help ramp up medical and healthcare facilities. The benefits of this will help enhance capacity for the longer term as it covers diagnostic, preventive as well as combative aspects of healthcare," said Dr. Joseph Thomas, Head of Research, Emkay Wealth Management.

India's healthcare sector has been overburdened since last month due to a massive surge in covid cases. This has led many states to impose a lockdown.

On Tuesday, India reported 3.83 lakh new cases with 3780 fatalities taking the overall death toll to 2.26 lakh. With this total confirmed cases stands at 2.06 crore. Currently India has over 20 lakh active cases.

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