Sensex Trades Marginally Lower; Telecom & Healthcare Stocks Drag

Fri, 18 Jan 12:30 pm | Monish Vora, TM Team

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Share markets in India are presently trading on a negative note. Barring energy sector, all sectoral indices are trading in red with stocks in the telecom sector, FMCG sector and healthcare sector witnessing maximum selling pressure.

The BSE Sensex is trading down by 81 points (down 0.2%), while the NSE Nifty is trading down by 26 points (down 0.2%). The BSE Mid Cap index is trading down by 0.4% and the BSE Small Cap index is trading down by 0.5%.

The rupee is trading at Rs 71.14 against the US$.

Market participants are tracking Wipro, NIIT Technologies, L&T Infotech, Dhanlaxmi Bank as they announce their December ended quarter results today.

In the latest development from the results corner, Hindustan Unilever share price has posted 9% growth in its net profit at Rs 14.4 billion as compared to Rs 13.3 billion in the same period last year.

Revenues came in at Rs 93.6 billion in Q3FY19, witnessing a growth of 12.4% against Rs 83.2 billion in Q3FY18.

To know more about the company you can read HUL Q3FY19 Result Analysis and HUL Annual Report Analysis on our website.

You can also read our recently released Q3FY19 results: Zee Entertainment's latest result analysis, Reliance Industries, Federal Bank, Infosys, TCS, Trident.

In the news from the commodity space, oil prices edged higher today after a report from the Organization of the Petroleum Exporting Countries (OPEC) showed its production fell sharply last month, easing fears about prolonged oversupply.

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Looking at oil supplies, 2019 crude prices have been supported by supply cuts from a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.

OPEC oil supply fell by 460,000 barrels per day (bpd) between November and December, to 32.7 million bpd, as top exporter Saudi Arabia made an early start to a supply-limiting accord, while Iran and Libya posted involuntary declines.

It would be interesting to see how this pans out. Meanwhile, we will keep you updated on all the developments from this space.

Moving on to the news from the pharma space, Sun Pharma share price is witnessing selling pressure today on reports that new whistleblower documents had been sent to the markets regulator.

According to a news report by a financial news website, huge transactions of over Rs 58 billion allegedly took place between Aditya Medisales and private companies of Sun Pharma's promoters between 2014 and 2017.

This is as per a new 172-page complaint (with documents) sent by the whistleblower on Sun Pharma to the markets regulator.

Shares of the company fell as much as 12% today on back of the above news.

Last month, a note by Macquarie, an Australian brokerage firm went viral which raised concerns among the investing community.

The note raised questions about inadequate disclosures regarding the role of promoter Dilip Shanghvi's brother-in-law Sudhir Valia, Sun Pharma's past links with banned traders Ketan Parekh and Dharmesh Doshi, related party transactions involving promoter Shanghvi and guarantees given to real estate firm Suraksha Realty.

In November, a whistleblower had approached markets regulator with a document alleging various irregularities by the company, its promoter Shanghvi and others.

The whistleblower made allegations in a 150-page letter sent to the markets regulator, which had earlier banned Doshi and Parekh following the 2001 scam.

According to the news in a leading financial daily, the irregularities involved two or three major rounds of foreign currency convertible bonds (FCCBs) issues by Sun Pharma during 2002-2007, which was managed by Jermyn Capital LLC.

The markets regulator reportedly is planning to reopen the investigation into the insider trading case against the company and its promoters which was settled through consent mechanism.

Speaking of pharma sector, note that the BSE Healthcare Index has been on a roller coaster ride in the past few years. The period from 2012 to 2015 saw the index go up more than three times.

And since then it has been a painful ride downwards, as can be seen from the chart below:

The Roller Coaster Ride of the BSE Healthcare Index

As we wrote in one of our editions of The 5 Minute WrapUp...

• Pre-2015, pharma companies enjoyed a fairytale ride in the US market. Low labor costs, good chemistry skills, along with efficiency, ensured Indian companies could copy innovator drugs to make generic drugs at a fast pace.
  
  The generic business had lucrative margins for all major pharma players. But the party did not last long. In the quest to supply drugs quickly, they compromised on quality at their manufacturing facilities.
  
  No wonder, the US regulatory authority (USFDA) took strict action. Sun Pharma received a warning letter for its Halol manufacturing facility in 2015. It was like a bolt out of the blue. Since then, the downward spiral began and has continued till date.

We believe that pharma companies that invest in creating a pipeline of complex generics or building competencies in alternative dosage forms are better equipped to tackle the changing dynamics in the US generics market as well as in the overall industry.

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.

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