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Sensex Finishes Marginally Lower; TCS Gains 0.9%
Tue, 17 Jan Closing

The Indian share markets finished the day on flat note with negative bias amid mixed Asian cues. At the closing bell, the BSE Sensex closed lower by 53 points, whereas the NSE Nifty finished lower by 15 points. The S&P BSE Mid cap ended flat while the S&P BSE Small Cap finished up by 0.3%. Sectoral indices finished the day on a mixed note with metal, oil & gas stocks leading the losses while, FMCG, power & IT stocks led the pack of gainers.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 lost 1.5% and the Hang Seng rose 0.54%. The Shanghai Composite gained 0.17%. European markets are trading in red. The FTSE 100 is lower by 0.33%, while France's CAC 40 is off 0.51%. Shares in Germany are down with the DAX at 11,471.54.

The rupee was trading at Rs 68.05 against the US$ in the afternoon session. Oil prices were trading at US$ 53.19 at the time of writing.

IT stocks ended the day up by 0.3% with HCL Infosys and Info Edge leading the gainers. According to an article in the Livemint, Tech Mahindra has opened a new facility in Dublin, Ireland to focus on emerging technologies such as Robotics and Automation, Business Analytics, Cloud Infrastructure and Digital Services.

The Centre, to be operational in the first quarter of calendar year 2017 will be central to Tech Mahindra's operations in the country and would focus on emerging technologies. The move is in line with an overall shift in focus by Indian IT service providers to newer technologies in a quest to survive in a fast-changing IT services world.

The move comes in the wake of Britain's preparations to exit the European Union. Once Britain exits, Ireland would be the only English-speaking country in the EU. The new CoE would employ around 150 engineers over the next three years and will help the company deliver technology services to clients in Ireland as well as Europe.

India Lags Far Behind in the Race for Machines

The chart above presents a comparison regarding installation of industrial robots. So while India is gloating over its edge over China when it comes to low-cost labour, in fact, India is lagging way behind compared to other developing economies.

Meanwhile, Tata Consultancy Services (TCS), has partnered with Aurus to enhance omnichannel payment solutions with OmniStore. The partnership is to deliver payment solutions for retailers using TCS OmniStore. The omnichannel payment solution facilitates transactions across channels and delivers unmatched convenience and security to both end consumers and retailers.

Through this partnership with Aurus, retailers using TCS OmniStore will be able to easily process multiple payments across channels.

India is an information technology powerhouse. In an extremely challenging global economy, western corporations are now expecting Indian IT firms to deliver a more compelling value proposition in terms of growth prospects. Going forward, whether the Indian IT firms are up to the task will be the key thing to watch out for.

TCS share price ended the day up by 0.9%.

Moving on to the news from stocks in pharma sector. As per an article in a leading financial daily, Cadila Healthcare, and its subsidiary Zydus Pharmaceuticals (USA) Inc., have finalized an agreement with Kowa Pharmaceuticals America, Inc. and Nissan Chemical Industries, to settle all outstanding patent litigation related to Livalo (pitavastatin calcium) tablets.

Reportedly, Kowa and Nissan have granted licence to market Zydus' generic version of Livalo, beginning on May 2, 2023, or earlier under certain circumstances. Livalo tablets are indicated as an adjunctive therapy to diet to reduce elevated total cholesterol.

Recently, Cadila had also settled all outstanding patent litigation related to Qudexy XR (topiramate) extended-release capsules with US-based Upsher-Smith Laboratories, Inc. Qudexy XR extended-release capsules are used to treat certain kind of seizures in adults.

Innovators in the pharmaceutical industry largely make use of patents. They make heavy use of patents whenever they create a new drug. In one of our recent editions of The Equitymaster Digest, we wrote everything you need to know about patented drugs, its advantages and its implications. Here's a snippet:

  • "That's how the innovators in the pharmaceutical industry work. They make heavy use of patents whenever they create a new drug. The patent allows them to recoup the high capital expenditure that goes into the research and development (R&D) of new drugs. Companies that have a patent on a particular product are immune from competition for the duration of the patent."

Cadila Healthcare share price ended the day up by 0.2%.

And here's a note from Profit Hunter:

Today we will talk about the sectors that are in the news - the IT sector and the Pharma sector

The chart below compares the Nifty-IT index and Nifty-Pharma index. Both the sectors peaked out in early 2015, and traded in a downtrend since then.

The export-oriented sectors usually tend to gain when the US Dollar strengthens vis-a-vis the Indian Rupee. The IT and Pharma sectors, despite being export-oriented sectors, could not benefit from the strong dollar trend.

The Nifty IT index is down nearly 20% from its March 2015 peak and the Nifty Pharma IT is down 25% from its April 2015 high.

The USDINR clocked nearly 10% gain from the corresponding peaks of both the defensive sectors.

Certainly there are other factors affecting these sectors apart from the US dollar. Relying only on US dollar to gauge the strength of these sectors would have been disastrous. Therefore, it is always recommended 'not to rely only on one factor' while zeroing on a stock.

Nifty-IT and Nifty-Pharma Underperforming Despite Strong Dollar
Nifty-IT and Nifty-Pharma Underperforming Despite Strong Dollar  

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Nov 24, 2017 (Close)