While the surge in shares of oxygen suppliers like
and may not indicate that a third wave is coming soon, the move is related to the preparation towards that eventuality.
The Delhi government earlier this week announced a Medical Oxygen Production Promotion Policy that aims to make the capital self-reliant in terms of supply and production of medical oxygen in order to avoid the catastrophic scenes that unfolded in the city’s hospitals during the second wave.
During the second wave, many hospitals in Delhi ran out of medical oxygen that was critical for saving lives of Covid-19 affected patients. The dearth of medical oxygen and difficulties in procuring it in time led to loss of several lives that could have otherwise been protected.
In order to avoid the same fate, the state government has decided to offer incentives to medical oxygen manufacturers to set up manufacturing units near the capital and ensure steady flow of medical-grade oxygen to its hospitals. The result: shares of Linde India soared 12 per cent, while those of Refex Industries skyrocketed 19 per cent.
The Finance Minister Nirmala Sitharaman’s words that the government will have “bare minimum” presence in the insurance sector was enough to spark a sharp rally in shares of state-owned general insurers today.
Stocks of General Insurance Corporation and New India Assurance surged 13 per cent and 7.4 per cent, respectively, on the hope that the finance minister’s determination will result in quicker divestment of the government’s stake in the two general insurers.
The passage of the General Insurance Business Amendment Bill in the monsoon session gives the government the leeway to bring down its stake in such companies below the mandated 51 per cent threshold. Media reports so far have suggested that the government is keen on privatizing either GIC, United Insurance or New India Assurance in the future.
The BofA Effect
Brokerage firm BofA Securities today surprised the Street with its bearish report on three major industrial space stocks – Havells India,
and Tata Power. The brokerage firm downgraded its rating on all three stocks.
While shares of Tata Power were able to brave the setback, those of Voltas and Havells India slumped 1.5 per cent and 4.6 per cent respectively.
In the case of Voltas and Havells India, the brokerage firm said that high earnings growth expectations and extremely rich valuations limit the upside potential in the scrips. On Tata Power, the brokerage firm cited that lack of clarity on the monetization of the renewable power assets and the issues plaguing the Mundra power plant that could limit upside.
The brokerage firm, however, added a caveat that it is positive on the long-term potential of all three. So, we guess, it’s up to the investors to decide if they care for the short term more than the long term.