Indian Stock Markets Open at Lifetime Highs; Sun Pharma & Yes Bank Top Gainers

Mon, 8 Jan 09:30 am | Rini Mehta, TM Team

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Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.41% while the Hang Seng is up 0.03%. The Nikkei 225 is trading up by 0.88%. US stocks gained on optimism over earnings and economic growth.

Back home, India share markets opened the day on a strong note that neared all-time peaks. The BSE Sensex is trading higher by 194 points while the NSE Nifty is trading higher by 49 points. The BSE Mid Cap index and BSE Small Cap index opened the day up by 0.5% & 0.8% respectively.

All sectoral indices have opened the day in green with consumer durables stocks and PSU stocks witnessing maximum buying interest. The rupee is trading at 63.38 to the US$.

As per an article in leading financial daily, foreign investors poured in a staggering Rs 1.5 trillion in the Indian debt markets in 2017 on the back of higher bond yields and stable currency, after pulling out massive funds in the preceding year.

The overall net inflow has made 2017 as the best period for debt markets in terms of overseas investment since 2014.

According to latest data with depositories, Foreign Portfolio Investors (FPIs) bought net assets worth Rs 1.5 trillion into the debt markets in 2017. This was in stark contrast to the pullout of Rs 436.5 billion seen in 2016.

This investment instrument had received net inflow of 458.6 billion and Rs 1.6 trillion in 2015 and 2014, respectively.

The stock markets reached dizzying heights in 2017 thanks to strong foreign inflows. But it is the bond market that has witnessed a strong revival. Foreign debt raised by Indian companies surged ten-folds to US$ 41 billion in 2017. This is the highest ever infusion of foreign funds in the domestic debt markets in the last 15 years.

Bond Markets on a High

Factors such as economic stability, abundant global liquidity and diversification needs of investors have stoked demand for Indian bonds in the overseas markets.

In comparison, foreign investors purchased equities to the tune of over Rs 510 billion last year.

Moreover, the year's inflow has pushed FPIs' cumulative net investment in the debt market -- since being allowed over two decades ago in November 1992 -- to Rs 2.6 trillion.

One shall note that, foreign flows in debt markets had started the year on a negative note and pulled out money in January. However, they infused money in February and their bullish stance continued uninterrupted till December.

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Going ahead, whether 2018 would be same when it comes to investment by FPIs will be the key thing to watch out for as withdrawal of liquidity and rate hikes in developed economies pick up.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, The US Food and Drug Administration is expected to begin inspection of Sun Pharma's manufacturing facility at Halol in the second week of February.

The much-awaited inspection is critical as the facility produces multiple medicines from tablets to ointments and injectables.

Following an inspection in the last week of November 2016, the Halol site was issued nine observations for deviations from standard manufacturing quality and procedure norms as spelled out by the US agency.

Earlier in September 2014, the Halol site came under the lens, receiving as many as 23 observations from the US agency. The inspection culminated into a warning letter fifteen months on in December 2015.

Consequently, the long delay on finding a resolution for the Halol site has consecutively impacted Sun Pharma's financial performance, aggravated further by a sharp drop in prices of key products that are sold in the US.

When fully operational, the Halol site had contributed as much as 15% of Sun Pharma's US revenues.

Sun Pharma share price opened the day up by 2.3%.

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