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GOODWILL EAGLE’S EYES:  MARKET NEWS: Pandemic paves way for Pharma companies.

No doubt the COVID ’19 pandemic has played havoc on many fronts-on the economy as a whole and particularly  on Transport segment, Infra sector, Financial sectors,  Building materials supply sector and education as well forcing people of all walks of life to remain indoors, allowing the medical and related personnel to do their job of  protecting the sick covid patients. The future of students at school and colleges remains a mystery and full of misery. Online classes have created an exponential growth for players like Byju’s and Vedantu.

Virus has impacted the growth outlook very badly  and decision of the rating agencies like Fitch, Moody’s and S & P  to rewrite the rating for India with negative outlook has not come too soon and of course on expected lines. ADB predicts that the Indian economy would shrink 4  % in 3030-21.

But the Bourses have started ignoring the impact of  virus and resultant effect on the economy as a whole and surprisingly the BSE and NSE indices are quite active with a lot of positive  advances in many sectors like I.T and more significantly Pharma shares. Almost all the Pharma shares like Cipla, Glenmark, Lupin, Reddy’s, Devi’s Sun Pharma—name any Pharma it is in green at least now and that many of them are activating their  R & D initiatives, investing substantial financial allocation to  invent  some  remedies for the virus.

While the overall tax revenue for the Union and State governments has been substantially dwindling to unprecedented levels, – both GST and Direct tax collections- quite surprisingly Pharma sector has indeed come to the rescue of the Government in terms of advance  payment of Tax  with a higher payout during the quarter while many other sectors like infra, steel, cement  have crumbled under the weight of  Corona induced lock-down. Data analysis reveals that the  fall in revenue collections for this month has been  over 35 % of the normal collections  only and very poor advance tax collections would indicate the status quo. While sectoral break-up is not available , consumer goods and banks have remained steady at the time of payment of advance tax. Advance tax payment is a good barometer  of corporate sector  performance and  economic activity.  Data reveals that the corporation tax  collections so far in June was around 37 % while personal tax saw a near 35 % dip in collections. Another redeeming factor is that the Securities Transaction taxes have shown an upward march during the period thanks to the agile investors. Tax authorities find TDS is steady and the next phase of advance tax collections would be up.

So it is quite interesting to watch the Pharma sector in Bourses for medium to long term gains.

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