Panic-stricken investors shift focus back to pharma, IT scrips

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Safe-haven strategies played out in the market on Friday, with investors in the wake of fresh Covid concerns dumping sectors that could be at the receiving end if governments announce another lockdown, according to a newspaper report. At the same time, pharmaceutical, information technology and consumer stocks saw buying interest.

Hospitality scrips under pressure again 

Hotels, travel services and aviation sector stocks were the worst hit, The Economic Times reported. The newspaper quoted Amit Kumar Gupta, portfolio adviser at Adroit Financial Services, as saying that the worst casualty can be hospitality stocks in case of another round of lockdowns as travel curbs from South Africa, Botswana, Germany, and Austria are announced.

According to the report, Chalet Hotels, Indian Hotels, Lemon Tree, Speciality Restaurants, EIH and Mahindra Holidays lost between 7-15% on Friday. PVR and Inox Leisure declined 11% and 9%, in that order. IndiGo parent InterGlobe Aviation and SpiceJet plunged 9% and 7%, respectively.

Most of these scrips bore the bunt of selling pressure last year but had recovered since then after accelerated vaccination programmes and falling number of Covid cases boosted the hopes of recovery. Now, fresh worries about another round of Covid wave have dampened the investor sentiment.

The Economic Times quoted VK Vijayakumar, chief investment strategist at Geojit Financial Services, as saying that pharma is attracting investors and IT is resilient on expectations of further acceleration to digitisation. He also cautioned that this trend need not sustain.

Piyush Nagda, head of investment products at Prabhudas Lilladher, also said investors need to be cautious and reduce tactical investment bets.

Opportunity emerges

He is quoted as saying that a shift from mid- and small-cap to large-caps can be seen, and the market fall gives good opportunities.

Gaurav Dua, head, capital market strategy, Sharekhan. Is quoted as saying that it is better to cut exposure to small-cap, penny and momentum stocks. Sharkhan is overweight on IT, pharma, banks, and select consumer stocks.

The Nifty pharmaceutical index on Friday rallied 1.7%, with Cipla, Dr Reddy’s, Alkem, Pfizer and Dr Lal Pathlabs, gaining between 3% and 7%.