Announcement of free for all vaccination, now what is the investment strategy on hospital stocks

PM Modi announced on 7 June that all people above 18 years of age in the country would be given free vaccine under the sponsorship of the central government. The Prime Minister further said that as part of its vaccination strategy, the central government would procure 75 per cent of the vaccines, while the private sector would be allowed to purchase only 25 per cent of the vaccines.

He further said that the private sector will be able to charge Rs 150 as service charge for the vaccine. Experts say that this announcement of the government is negative for private sector hospitals. This will have an impact on their profits.

VK Vijayakumar of Geojit says that the announcement of providing free vaccine with a service charge of Rs 150 to all people above 18 years in the country will have a negative impact on private hospitals. Along with the high prices of the vaccine, private hospitals were also charging very high service charges for its installation.

He further said that the demand for corona vaccine from private hospitals is expected to decline sharply and it has started to happen. Many big private hospitals in the country are trying to cancel the order placed in advance for the vaccine.

This announcement of the government is like a big ganja on private hospitals as they were on the verge of making huge profits from Vaccinesh Drive and now it seems to be turning on water.

In today’s trading, the shares of Apollo Hospitals have seen a decline of about 0.50 percent. At the same time, Fortis Healthcare is also seen in red mark.

Similarly, the share of Max Healthcare Institute is down about 3 percent and it is seen around 236 while Narayana Hrudayalaya has also lost 0.50 percent.

Gaurav Garg of CapitalVia Global Research says that stocks like Apollo Hospitals, Fortis Healthcare, Max Healthcare Institute, Narayana Hrudayalaya, Shalby will have to bear the negative impact of this announcement by the government. However, this will be for short term only. As such, investors should be cautious and fundamentally stick to strong quality stocks.

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