Covid-19 effect: Pharma, oxygen, steel stocks rally

Even as the Covid-19 pandemic caused huge disruptions across the world, it has benefitted many sectors at the same time. While equity markets have seen an all-time high over the last year, some sectors such as pharma, steel and oxygen have seen huge rallies.

Even laggards in the previous years like Steel Authority of India Ltd (SAIL) have delivered massive returns. The share price of SAIL has increased five times since last year from Rs 28 per share to now trade at Rs 147.

Tata Steel’s share price is up 300 per cent in a year from Rs 280 last year to Rs 1,200 now. Others like JSW Steel and Jindal Steel & Power Ltd (JSPL) have risen similarly.

JSW Steel, Tata Steel, and Hindalco are the top three gainers since Sensex touched the peak in February, says Motilal Oswal. This rally is backed by rising underlying commodity prices and multiple rounds of earnings upgrades, it adds. The rally in steel stocks is also aided by a sharp rise in steel prices since the unlock phase started last year.

Read | Oxygen shares, real and imaginary, rally as India battles Covid-19 surge

Demand for oxygen to treat serious coronavirus cases has triggered a rally in stocks of oxygen manufacturing companies since March. Gagan Gases, that was trading at Rs 6 in April, has shot up to Rs 13 now, doubling in a month. National Oxygen that was trading at Rs 32 in March has rallied up to Rs 60 now.

“The first quarter will be a stellar one but the upcoming quarters will be as good only if oxygen requirement persists,” says Vishal Balabhadruni from CaptialVia Global Research Ltd.

Analysts point out that auto companies with a strong rural presence have done well in the last year as rural India was not affected as much as top cities.

Pharma firms like Sun Pharma and Cipla have risen over 40 per cent and shares of Aurobindo Pharma almost doubled in one year, and Divi’s Lab has seen an upside of 75%.

However, not all blue chips delivered big returns.