MUMBAI: After having lost investor favour during the monsoon season, cement stocks are steadily making a comeback.
The sector was largely ignored by investors after the second wave buying rush because of the uneven demand environment as well as rising pressure on margins. Cement companies faced high-cost pressures in the September quarter and were largely unable to pass on those costs to consumers due to a demand slack. However, the cost of fuel such as coal has declined rapidly with international coal prices plummeting in recent weeks. That, along with the start of the construction season in the country, has given investors some appetite for the sector.
No surprise that shares of cement companies such as UltraTech Cement, JK Cement, Ambuja Cements, ACC and Dalmia Bharat closed 3-4 per cent higher.
Joy ride from the parent
Pfizer Limited, the Indian listed arm of the global pharmaceutical behemoth Pfizer Inc, soared nearly 5 per cent today because of its parent. Pfizer Inc’s shares soared in the US after the company made a breakthrough that has the potential to diminish the danger of the Covid-19 virus. The company had last week announced that its experimental Covid drug can reduce hospitalisations by 89 per cent in persons affected by the coronavirus. If Pfizer’s drug passes regulatory scrutiny, it could be a game changer in mankind’s fight against the pandemic and could possibly reduce the dependence on vaccines.
IndusInd Bank in trouble again
A few weeks ago, an anchor on a popular business news channel remarked how IndusInd Bank had bounced back strongly, especially as it was facing concerns around its asset quality and promoter issues a little more than a year ago. Last week, those concerns came back after a media report said a whistle was blown on alleged evergreening of loans at one of the subsidiaries of the lender. While IndusInd Bank has categorically denied the allegations, investors are concerned that it may attract the regulatory gaze of the RBI. Those concerns saw the stock plunge more than 10.5 per cent today.
Pfizer’s gain is Divi’s pain
The pharmaceutical business can be as cutthroat as any other sector. One day you are sitting on a multi-billion dollar opportunity and the next day, that opportunity has diminished immensely. Something of that sort has happened with Divi’s Laboratories.
A few months ago, the company’s stocks soared following the positive results from Merck’s Covid-19 drug Molnupiravir – for which Divi’s is a raw material supplier. However, with Pfizer now bringing a better drug to combat Covid, analysts say it considerably reduces the opportunity size for Molnupiravir, and also cuts a few billions of dollars of potential API sales for Divi’s. Add to that the underwhelming performance in the September quarter by the drugmaker and one can easily see why investors will punish the stock with an over 5 per cent cut.