Pharma and IT stocks saw strong buying action on Wednesday, helping the
Sensex rise over 150 points. Analysts attributed the gains in pharma and
IT stocks to weakness in rupee and defensive-related buying amid market
volatility.
IT and pharma companies earn a major portion their revenues from overseas markets. So a weakening in the rupee helps boost their profits.
The BSE healthcare index was up 2.5 per cent to be the biggest sectoral gainer, with Sun Pharma, Lupin and Cipla leading the gains. Sun Pharma shares were up nearly 4 per cent to be the biggest gainer among Nifty stocks. Sun Pharma also received a boost after Bank of America Merrill Lynch upgraded the stock to buy with a target price of Rs 1,070.
Cipla and Lupin edged up over 2 per cent. In the midcap space, FDC surged nearly 12 per cent while IPCA Lab rose 6 per cent and Glenmark Pharma advanced 3.5 per cent.
The IT index rose over 1 per cent, with Wipro, HCL Tech and Infosys rising between 1.5 per cent and 2 per cent.
Meanwhile, Sensex reversed a 110-point fall in early trade to rise over 190 points at its day's high amid a recovery in Chinese markets. The Nifty rose 8,520 at its day's high.
China's stocks markets initially fell over 5 per cent today before rising nearly 1.5 per cent. The Chinese markets had slumped over 6 per cent on Tuesday.
Gaurang Shah, assistant vice president of Geojit BNP Paribas Financial Services, said the volatility in China will affect global markets including India. He suggests investors shifting to IT and pharma sectors, which are seen as defensives and gain from rupee weakness.
Ajay Srivastava, MD of Dimensions Consulting, said pharma and IT stocks are poised for bigger gains as investors rush to the safety of these stocks amid market volatility.
Bank of America Merrill Lynch in a report said that rupee depreciation is a positive catalyst for pharma stocks. Falling crude prices will also lead to lower raw material (active pharmaceutical ingredient) cost for the pharma sector, it added.
The brokerage sees Cadila Healthcare, Aurobindo Pharma and Lupin as biggest beneficiaries of a weak rupee. Cadila Healthcare was up nearly 1 per cent while Aurobindo Pharma gained nearly 3 per cent.
The rupee on Wednesday fell to 65.43/dollar at its day's low, before recovering to 65.26. On Monday, the rupee had closed at 65.31. The rupee has fallen over 2 per cent since China devalued its yuan on August 11.
IT and pharma companies earn a major portion their revenues from overseas markets. So a weakening in the rupee helps boost their profits.
The BSE healthcare index was up 2.5 per cent to be the biggest sectoral gainer, with Sun Pharma, Lupin and Cipla leading the gains. Sun Pharma shares were up nearly 4 per cent to be the biggest gainer among Nifty stocks. Sun Pharma also received a boost after Bank of America Merrill Lynch upgraded the stock to buy with a target price of Rs 1,070.
Cipla and Lupin edged up over 2 per cent. In the midcap space, FDC surged nearly 12 per cent while IPCA Lab rose 6 per cent and Glenmark Pharma advanced 3.5 per cent.
The IT index rose over 1 per cent, with Wipro, HCL Tech and Infosys rising between 1.5 per cent and 2 per cent.
Meanwhile, Sensex reversed a 110-point fall in early trade to rise over 190 points at its day's high amid a recovery in Chinese markets. The Nifty rose 8,520 at its day's high.
China's stocks markets initially fell over 5 per cent today before rising nearly 1.5 per cent. The Chinese markets had slumped over 6 per cent on Tuesday.
Gaurang Shah, assistant vice president of Geojit BNP Paribas Financial Services, said the volatility in China will affect global markets including India. He suggests investors shifting to IT and pharma sectors, which are seen as defensives and gain from rupee weakness.
Ajay Srivastava, MD of Dimensions Consulting, said pharma and IT stocks are poised for bigger gains as investors rush to the safety of these stocks amid market volatility.
Bank of America Merrill Lynch in a report said that rupee depreciation is a positive catalyst for pharma stocks. Falling crude prices will also lead to lower raw material (active pharmaceutical ingredient) cost for the pharma sector, it added.
The brokerage sees Cadila Healthcare, Aurobindo Pharma and Lupin as biggest beneficiaries of a weak rupee. Cadila Healthcare was up nearly 1 per cent while Aurobindo Pharma gained nearly 3 per cent.
The rupee on Wednesday fell to 65.43/dollar at its day's low, before recovering to 65.26. On Monday, the rupee had closed at 65.31. The rupee has fallen over 2 per cent since China devalued its yuan on August 11.
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