Hospital stocks came under strong selling pressure on Wednesday morning, with counters falling up to 7% amid heavy volume.
Stocks, such as Max Healthcare Institute (down 7%), Apollo Hospitals Enterprise (down 6%), Yatharth Hospital (down 5%), Fortis Healthcare (down 6%), Artemis Medicare Services (down 5%), and Aster DM Quality Care (down 5%), crashed 5-7%.
Other players from the segment, such as HealthCare Global Enterprises (down 4%), Krishna Institute of Medical Sciences (KIMS) (down 4%), Medanta (down 4%), and Rainbow Children’s Medicare (down 3%), also lost significantly.
Why are hospital stocks down today?
The immediate trigger behind the fall in hospital stocks appears to be the Supreme Court’s criticism of the commercialisation of private healthcare.
According to media reports, the Supreme Court observed that common citizens bear the brunt of higher drug prices as private hospitals operate as profit-driven industries rather than service providers.
“The Supreme Court’s comments on the functioning og corporate hospitals might have influenced sentiment,” said Ajit Mishra, SVP – Research, Religare Broking.
Moreover, most hospital stocks are falling today due to profit-booking after the US announced that certain speciality medicines and their ingredients will be exempt from a new 100% tariff on patented drugs.
The exemption covers medicines used to treat rare diseases and several specialised therapies, including infertility treatments, cell and gene therapies and antibody-drug conjugates. The same zero-tariff treatment will apply to qualifying ingredients used in these products.
The US Commerce Department listed India among 20 countries eligible for the exemption in a notice published in the Federal Register.
Experts say the pharma and hospital segments are witnessing profit-booking after their outperformance. Year-to-date, the BSE Healthcare index is up 15% compared to a 15% fall in the benchmark Sensex.
“Healthcare stocks are witnessing profit booking as they have outperformed this year. Market participants are using the positive news on US tariff exemption to take some money off the table,” said Mishra.
“Markets anticipate a recovery now, so participants want to exit defensives and chase the momentum now,” Mishra added.
The Q2 earnings season will start in the coming weeks. The fresh momentum in the sector can be seen if earnings exceed expectations.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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