NEW DELHI, March 20: It was a day when stocks of multinational companies (MNCs) ruled the roost, setting aside fears generated by the "swadeshi" talk. MNCs, especially pharma scrips, on the Bombay Stock Exchange (BSE) set new records. Continuing with their unbridled gains, few scrips scaled new highs while some inched closer to their all-time highs. While marketmen cited various reasons for the spurt on pharma counters, fresh investments poured in and volumes touched a record high.On Friday, German Remedies witnessed its highest volume of 4.28 lakh shares while the price shot up from Rs 328 to Rs 342.
The scrip started its northward journey towards the middle of this month with the price at Rs 295. While SmithKline Beecham Pharmaceutical touched an all-time high of Rs 712, Pfizer inched closer to its all-time of high of Rs 570 with the scrip closing at Rs 544. Parke Davis saw its second highest volume so far when approximately 51,000 shares were traded on the BSE.
"There is new money and this isone sector which looks attractive. While pharma companies like Dr Reddy's have posted good results, the stocks are cheap," Balakrishnan of Dil Vikas Finance said.
A low-floating stock has also added to the rally in pharma scrips, with a number of domestic and foreign funds clamouring for their pie of the pharma stocks.
A theory doing the rounds in the markets hinges on the "swadeshi" tinge of the new dispensation at the centre. According to a broker, the market expects a restriction on floating of 100 per cent subsidiaries by foreign pharma companies. "It in effect means that whatever fresh infusion of funds will come, it will go to existing companies and new products will also be launched under the banner of existing subsidiaries," he elaborated. "Besides, pharma scrips are also sort of FMCG scrips which are at present finding favour with investors," he added.
"Marketmen are looking for quality stocks which are few. Among these few quality stocks, pharma scrips are one where growth is expectedto be more than 30 per cent in the next two-three years," another BSE broker said.
Valuation is certainly the key factor which is driving investors in hordes to these counters. For instance, the scrip of Rhone Poulenc had fallen from a high of Rs 652 on August 8, 1997 to Rs 352 in February this year. Since then, the scrip has generated buying interest and is trading at Rs 447. Wockhardt, on the other hand, had dropped from a high of Rs 278 in August last year to a low of Rs 169 in January. The scrip has since risen and closed at Rs 219 on Friday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
