The Indian markets had a rather volatile session today. After oscillating to either side of yesterday's close for a larger part of the session, selling activity finally took toll pushing the indices into the red. There was no respite in the final trading hour as well and the markets closed well below the dotted line. While the BSE Sensex closed lower by around 75 points (down 0.4%), the NSE Nifty lost around 18 points (down 0.3%). The BSE Midcap closed flat, while the BSE Smallcap gained around 0.4%. Losses were seen in IT, banking and metals stocks.
Barring India, most Asian indices closed in the green today while the European indices have opened on a mixed note. The rupee was trading at Rs 45.78 to the dollar at the time of writing.
As per a leading business daily, engineering major BHEL has received orders worth Rs 9 bn from ONGC to supply 6 on-shore oil rigs. Out of these, 4 rigs will be for Sibsagar in the eastern region, while 1 rig each will be for the Krishna-Godavari Basin and for Ankleshwar. Further, BHEL expects to deliver the first rig to ONGC in 18 months from the date of order. It must be noted that BHEL manufactures oil field equipment in collaboration with US companies like US Steel Engineers and Consultants, Skytop Brewster, Branham Industries and IRI International, USA.
This development comes as a positive for the company and will enable it to augment its revenue stream. At the same time, execution remains an issue given that BHEL has been blamed for delaying on orders in the past. Infact, one reason for this could be the huge order book that the company has built up and the unavailability of adequate resources to execute the same on time. The stock closed higher today while its peers L&T and ABB also closed firm.
Pharma stocks closed mixed today. While Sun Pharma, Ranbaxy and Dr.Reddy's found favour, Cipla closed in the red. As per a leading business daily, domestic pharma major Dr.Reddy's has entered into an agreement with Hyderabad-based Transgene Bioteck Ltd to manufacture and commercialise the active pharmaceutical ingredient (API) 'Orlistat'. The latter is used to treat obesity and acts by preventing the absorption of fats from the diet thereby reducing the intake of calories. While this drug is already being sold in the global market by Roche and GSK Plc as 'Xenical' and 'Alli' respectively, Transgene has come out with a new technology to manufacture this API.
This deal is beneficial to both the parties. While Dr.Reddy's will be able to capitalise on Transgene's unique technology of manufacturing 'Orlistat' API, Transgene will be able to leverage on Dr.Reddy's strong marketing and distribution network. Further, Dr.Reddy's will pay Transgene an upfront payment, additional payments for certain commercial milestones and royalties on the sale of 'Orlistat' API worldwide. We believe this agreement is positive for Dr.Reddy's and will enable it to augment its product portfolio with niche products which have become the order of the day in a highly competitive global generics market.
Indian Prime Minister Manmohan Singh is confident of India achieving a GDP growth rate of 7% for FY10. Interestingly, this is a tad lower than what the Finance Minister Pranab Mukherjee has predicted, namely 7.75%. Further, the PM is optimistic that India could return to those heady years of achieving 9-10% annual growth in a few years time. The obstacle that lies on India's path to higher growth not surprisingly is poor infrastructure. The PM has pledged that his administration would work to address key constraints in the infrastructure and the agriculture sectors as these were the key priorities of the Congress-led government. But it remains to be seen when these pledges actually translate into action and more importantly into meaningful results.