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Sensex Trades on a Volatile Note; Power Stocks Top Losers
Fri, 19 Jan 01:30 pm

After opening the day in green share markets in India  witnessed choppy trading activity and are presently trading above the dotted line. Sectoral indices are trading on a mixed note, with stocks in the realty sector and stocks in the power sector witnessing maximum buying interest. While stocks in the IT sector are leading the losses.

The BSE Sensex is trading up by 90 points (up 0.3%) and the NSE Nifty is trading up by 15 points (up 0.1%). Meanwhile, the BSE Mid Cap index is trading down by 0.2%, while the BSE Small Cap index is trading down by 0.1%. The rupee is trading at 63.73 to the US$.

In news from stocks in the steel sector. Tata Steel share price is in focus today after the steel major raised over US$ 1.3 billion through bond issues.

The company raised funds through unsecured bonds in the international markets.

The issue comprises US$ 300 million 4.45% unsecured bonds due on July 24, 2023 and US$ 1 billion 5.45% unsecured bonds due on January 24, 2028 by Abja Investment Co Pte Ltd, a wholly-owned subsidiary of Tata Steel incorporated in Singapore.

The bonds are rated 'BB-' by S&P and will be listed on the Singapore Exchange (SGX).

Tata Steel said that the funds from the issue will be used to refinance the offshore obligations of the group, which will enhance its financial flexibility and improve the overall balance sheet.

With the current development, Tata Steel is set to join the ever-growing list of Indian companies opting to raise funds via bond issues.

Increasing Bond Issues by Indian Companies

Indian companies raised a record US$ 46.5 in debt and equity in 2017, the highest amount in the last decade. 64% of these funds are from the financial sector. What is interesting is that the energy and power sector was the second highest in raising funds. Also, amongst the financial sector companies, Power finance corp. Ltd (PFC) which raised US$ 3.5 billion was one of the largest fundraisers.

At the time of writing, Tata Steel share price was trading down by 0.8%.

Moving on to news from stocks in the pharma sector. Torrent Pharma share price is in focus today, after the company announced the acquisition of US based Bio-Pharm.

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Bio-Pharm is a generic and over the counter (OTC) drug maker.

The deal was done for an undisclosed sum.

To date, Bio-Pharm Inc has 10 approved abbreviated new drug applications (ANDAs) and 10 ANDAs under review at the United States Food and Drug Administration (USFDA) for itself and its partners. The company also has an additional 17 products under development.

Torrent plans further investments to expand Bio-Pharm's facilities including R&D capabilities and will increase the number of its product filings.

The company added that this acquisition is an important step for increasing its presence in the United States and is consistent with its strategy of dosage form diversification, and provides it with new capabilities including manufacturing and R&D presence in the US.

The Indian pharmaceutical industry has come under a lot of regulatory pressure in the past few years.

The sector has faced great volatility over the years.

We had written about the current predicament of Indian pharma companies in one of the premium editions of the 5 Minute WrapUp:

  • Over the past few years, risk in the US markets has increased. The US Food and Drug Administration has become stricter on products entering US borders. Surprise inspections have increased and companies are being issued warning letters. This has impacted the business and earnings of Indian pharma players, causing major volatility for the sector.

The list of pharma sector woes is long. So, is there light at the end of the tunnel? Girish Shetty, Research Analyst thinks there is.

As per him, it doesn't make sense to paint all pharma stocks with the same brush. The leaders of the industry will certainly survive this phase. There are interesting, niche pharma stocks that are worth your attention.

Facing pricing pressures in the domestic and export markets, currency fluctuations, as well as manufacturing issues related to their plant, there is a transformation happening in the overall sector as to how business is done and will be done in the future.

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