Nanotechnology stocks dipped sharply when wider stock markets got the jitters late in July. But a buy-out of a British company at the end of the month helped the sector to bounce back.

The Lux Research nanotech index, which tracks companies that develop, sell and use nanotechnology-related products, had been performing steadily if not outstandingly until the dip in July (see graph). When the wider stock market fell back, the index exaggerated the underlying trend — as it usually does, given the number of small, high-risk companies in its make-up.

Peter Hebert, chief executive of Lux, the New York consultancy firm that compiles the index, says that overall sentiment towards the sector remains positive — especially for materials companies.

However, some constituents of the index had a difficult summer. Flamel Technologies, a French specialist in drug delivery, has almost halved in value since the start of June, because sales of the drugs it helps to deliver are lower than anticipated. And Symyx Technologies, a Californian company with diverse nanotech-related interests, dipped in late July, on news that deals it had struck with larger corporations are set to end.

Accelrys of San Diego, which sells software for modelling the behaviour of materials at a very small scale, fared better. Its shares rose sharply in July on the expectation of good financial results, which it duly announced on 1 August.

But it was the 31 July purchase of Cambridge Display Technology by Japanese company Sumitomo Chemical (see 'Physics buy-out') for almost twice its quoted value that boosted the sector. “That's a significant premium for a publicly-traded company,” says Hebert. “It's good news for the materials business, and it obviously helped the index.”