Share prices of almost all top pharmaceutical companies have recorded unprecedented fall during the week ended last Friday. Several of them touched to their 52-weeks lowest levels. The BSE Healthcare index of major 23 pharma companies drifted by 12.4 per cent during the week. The index touched its 52-week lowest level at 2772.73 points on October 24, 2008 with all the major companies suffered heavy losses. The undertone continues to be bearish and not likely to revive in the short time. Few shares from BSE HC index like Cipla, Glenmark, Matrix, Orchid Chem, Piramal Healthcare and Ranbaxy lost almost over 20 per cent during the week.
The BSE Sensex of 30 companies touched to its 52-weeks low level at 8566.82 before closing at 8701.07 points. It lost by 1070.63 points in a single day on October 24.
The poor financial performances of top companies also impacted the trading sentiment. The net profit of Dr Reddy's declined by 52 per cent, Alembic (67 per cent), Wockhardt (43 per cent), Piramal Healthcare (13.4 percent), Cipla (21 per cent) and Biocon (54 per cent). Companies like Lupin and Cadila, however, improved bottom line by 53 per cent and 18 per cent respectively. The foreign exchange losses may put pressure on other pharma players in the quarter.
The downturn in global equity markets, volatile rupee against US dollar and poor profitability of major companies impacted the overall investors' sentiment during the week. The government, SEBI and RBI are taking steps to build the investors confidence and overcome the global financial crisis. However, these measures failed to improve confidence of investor community.
Foreign Institution Investors (FIIs) continue to be sellers during the week on account of recessionary conditions in US and Europe. The FIIs sold shares worth Rs 4,778 crore during the week on BSE. The Domestic Institution Investors (DII) offered some buying support but could not fulfil the gap created by the FIIs. DII remained buyer in the market with net purchase of shares worth Rs 3,351 crore during the week ended October 2008.
The share price of Ranbaxy, a subsidiary of Daiichi of Japan, declined by over 26 per cent during the week ended October 24 and closed at Rs 188.95 at the end of the trading session as against Rs 256.20 as at the end of last week. The Ranbaxy touched to its 52-week lowest level at 184.40 on October 24. Meanwhile, Daiichi has completed its acquisition of 52.2 per cent of stake in Ranbaxy. However the news failed to generate any interest and the share price continued its southward direction.
Glenmark scrip suffered a serious setback and lost by 29.6 per cent and closed at Rs 324.05 as against Rs 460 week before. Orchid Chem shares moved down by 29.1 per cent to Rs 100.10 from Rs 141.15. Cipla slid by 19 per cent to Rs 159.60. GSK managed small improvement of 1.4 per cent and its share close at Rs 980.35. Lupin share lost only by 0.1 per cent on account of strong financial performance during the second quarter and first half of 2008-09. Cadila Healthcare scrip managed downfall of 1.1 per cent due to better growth in bottom line in Q2.
With free fall in share prices on October 24, the pharma majors like Aurobindo, Orchid, Matrix Laboratories, Biocon, Cipla, Pfizer, Piramal Healthcare, Wockhardt and Ranbaxy declined steeply and touched to their 52-week lowest level. Several other mid-cap companies also nosedived due to lack of support.
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