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A Strong End to the Week
Fri, 29 Jan Closing

Indian equity markets hit their highest level in three weeks as the indices flourished in the green during the entire trading session led by strong Asian cues. While the BSE Sensex closed higher by 401 points, the NSE Nifty closed higher by 139 points. Midcaps and small caps too fared well and closed well above the dotted line. The S&P BSE Mid Cap index and the S&P BSE Small Cap index closed the day higher by 2% and 1% respectively. Gains were largely seen in healthcare and consumer durable stocks.

Asian markets climbed after Japan shares took a roller-coaster ride in the immediate aftermath of the Bank of Japan's decision to adopt a negative interest rate policy. The Nikkei 225, which was down 0.6% before the announcement, surged as much as 3.51% soon after, before finally closing up by 2.8%. The Shanghai Composite and Hong Kong's Hang Seng finished up 3.09% and 2.66% respectively. European markets are broadly trading higher today with shares in France leading the region. The CAC 40 is up 1.26%, while Germany's DAX is up 1.01% and London's FTSE 100 is up 0.91%. The rupee was trading at 67.88 against the US$ in the afternoon session.

Power stocks finished on an encouraging note (up 1.7%) today with Torrent Power and KSK Energy witnessing majority of the buying activity. According to a leading financial daily, Power Grid Corporation of India is all set to invest about Rs 3.28 billion in ramping up two transmission projects. These investment proposals were approved by the company's board of directors.

An investment approval for Western Region System Strengthening Scheme-XIV in southern region for an estimated cost of Rs 1.21 billion with a commissioning schedule of 30 months from the date of investment, has been accorded by the board. Reportedly, the board has also approved an investment for 400-kv bays extension at 400-kv Vemagiri sub-station at an estimated cost of Rs 2.07 billion. The commission schedule for this project is also slated for 30 months from the date of investment.

The stock price of Power Grid finished the trading day up 2.2% on the BSE.

On a separate note, India's power sector is at an inflection point and most of its electricity demand in the next two decades will be met by burning fossil fuels despite huge investments in renewables according to a report released by World Economic Forum. WEF noted that India's plan to add 175 GW of capacity from renewables by 2022 can succeed only if the relevant stakeholders act in ways that encourage investment in this part of the sector (Subscription required). Reportedly, India would invest about US$845 billion in Transmission & Distribution networks between 2015 and 2040 to ensure universal access to power for customers.

According to an article in The Economic Times, Cipla has received approval from fair trade regulator Competition Commission of India to sell its stake in its consumer healthcare business to Mauritius-based FIL Capital Investments. In November last year, the company signed an agreement to sell 26.11% in Cipla Health to FIL Capital Investments (Mauritius) II Limited.

Through the consumer healthcare business, Cipla had entered the over-the-counter (OTC) healthcare market in India. In July last year, Cipla's board had approved an investment by Fidelity Growth Partners India and US-based Fidelity Biosciences, through FIL Capital Investments (Mauritius) II or its affiliates in the consumer healthcare business.

Meanwhile, shares of Dr. Reddy's Laboratories finished the trading day on an optimistic note (up 3%) after it was reported that the company has received the US Food and Drug Administration (Subscription Required) (USFDA) approval for Zembrace SymTouch injection intended for the treatment of acute migraine episodes in adults. The injection is intended to be given subcutaneously. Zembrace Symtouch will be marketed in the United States by Promius Pharma, a wholly-owned specialty company of Dr. Reddy's Laboratories.

The Indian pharma growth story has been encouraging. Rising healthcare awareness, increasing incomes, higher rates of chronic disease, and the availability of various drugs have been the key reasons for the growth in the sector. However, the past few months have been difficult as the average market growth for the September quarter was between 5% to 20%. In our recent edition of The 5 Minute WrapUp Premium, we have discussed the key points to determine a company's strength in the domestic market (Subscription Required).

Meanwhile, the recent Equitymaster Conference 2016 was a success. However, if you weren't able to join us at The Taj for any reason... Allow us to bring The Complete Equitymaster Conference 2016 to you!

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May 24, 2017 (Close)

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