Indian stock markets had a rather volatile outing today. The indices began the day's proceedings on a cautious note and the larger part of the day saw the markets oscillating to either side of yesterday's close. However, profit booking finally took toll in the later hours causing the indices to close below the dotted line. While the BSE-Sensex closed lower by around 57 points (down 0.4%), the NSE-Nifty closed lower by around 16 points (down 0.3%). The BSE Mid cap and the BSE Small cap bucked the trend and closed marginally into the positive. Losses were largely seen in auto, consumer durables and FMCG stocks.
As regards global markets, Asian indices closed mixed today while most European indices have opened in the red. The rupee was trading at Rs 53.03 to the dollar at the time of writing.
Pharma stocks closed mixed today. While Ranbaxy, Cipla and Lupin found favour, Cadila Healthcare and Dr Reddy's closed in the red. As per a leading business daily, Lupin has received US Food and Drug Administration (US FDA) approval for launching the generic drug 'Fenofibrate', which is used as a dietary supplement. This drug is the generic version of Abbott Laboratories' branded drug 'Tricor' and had annual sales of US$ 1.3 bn in the US. This is a positive for the company and will enhance its sales from the highly competitive US generics market. Given that pricing pressure is brutal in the US market, it becomes necessary to concentrate on niche products or garner an exclusivity window for certain drugs, all of which has the potential to enhance revenues and profits as the competition is lesser. Lupin has a strong branded generics portfolio in the US, which gives it an edge over its domestic peers.
Some relief seems to be in store for Indian steel companies. As per a leading business daily, coal prices have begun to cool down in the international market, which means that with raw material costs easing off, steel companies have headroom to reduce prices in the January to March quarter. Prices of coking coal have fallen by about 15% as demand has weakened due to a cut in production by global majors including Chinese steel mills. For instance, hard coking coal contracts are now priced at US$ 225 a tonne as against US$ 265 in the previous quarter. Given that availability of coal is woefully inadequate in India, most Indian steel companies are compelled to import coal from abroad and hence are directly influenced by any fluctuation in prices and exchange rates. With coal prices coming down, steel companies are likely to see profitability improve. But whether this sustains for a longer period remains to be seen given that coal suppliers seem to be limited. Both Steel Authority of India (SAIL) and Tata Steel closed firm today.