Accumulating Fortis stock is calculated risk

The Indian healthcare system is quite paradoxical. On the one hand it attracts medical tourists from around the world by offering quality healthcare facilities at lower cost, while on the other hand there is lack of affordable and accessible health services for a large part of the population. Even though healthcare touches the lives of every citizen of the country, healthcare provision remains inequitable and challenging. The government has been initiating and designing the policy framework to transform the healthcare sector of the country into a global manufacturing hub and bring affordable healthcare services to the doorstep of every citizen in the country. It is notable to add that the private sector is leading the way in this front and doing a commendable job by establishing hospitals across the country. In the pharmaceutical space, there are many drugs which have come under price control, thereby reducing trade margins and thus capping retail prices

. This is good for consumers, but does it impact the healthcare sector? At a superficial level, this may look like it is going to have a positive impact with the cost coming down. But in the long run it will be detrimental to any nation’s progress if there is less investment in research and development by many pharmaceutical companies in the healthcare sector. Many pharmaceutical specific analysts tracking healthcare companies wonder if by putting strict price control, which company would be interested in doing research and development. There has been a lot of bad news for Fortis Healthcare shareholders during the last few years and with time running out for the Singh Brothers to pay up, the company could be up for grabs by overseas investors. Investors and traders willing to take a calculated risk could look at accumulating the Fortis Healthcare stock currently quoting at Rs 135 on the Indian bourses for a short term perspective. There are chances of the Fortis stock going up by 10% in the next 12 weeks. Investors should discuss this buying opportunity with their financial advisor before venturing to buy the Fortis stock.

The barometer index, the S&P BSE Sensex rose higher by 177 points on Friday last to close the week at 38,862 levels on the back of expected positive trade talks outcome between the US and China. The market breadth indicating the overall health of the stock market was quite positive. On the BSE, 1,506 shares rose, while 1,066 shares fell. The markets will be looking forward to annual results starting next week and start of the election fever. We had written about Tata Group company Nelco Ltd in our last week’s column and the stock has gone up by nearly 20% in seven days. We advise investors to book profit in Nelco shares.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.