Indian equity markets started the day on a positive note and maintained this trend throughout the day. A sharp decline in India's current account deficit during the December quarter provided the perfect fuel vindicating foreign fund buying in the past few sessions to boost the markets to all-time highs. Realty and Power stocks were the biggest gainers. While the BSE-Sensex closed higher by 237 points, the NSE-Nifty closed higher by 72 points. BSE Mid Cap and the BSE Small Cap closed on a positive note.
As regards global markets, Asian indices closed in the green. European indices have opened in the green. The rupee was trading at Rs 61.2 to the dollar at the time of writing.
Sun Pharma is looking for partnerships or acquisitions to enter Japan, an especially lucrative market for the manufacture of low-cost drugs. Even though, Indian pharmaceutical firms have made significant headway in the US generics market, Lupin is the only Indian drugmaker that has so far made significant inroads in Japan. Infact, Cadila Healthcare, which also had a presence in the Japanese market, recently announced its intention of exiting the market on account of the difficulty in operating there. Sun Pharma gets more than half its sales from the US, the world's biggest pharmaceuticals market. Whether it will be able to gain a foothold in Japan and establish a significant presence there remains to be seen.
India's current account deficit fell to its lowest in eight years and stood at US$ 4.2 bn, or 0.9% of the gross domestic product (GDP), a sharp fall from US$ 31.9 bn (6.5%) in the year-ago period. The fall in CAD has been due to the government-imposed curbs on gold imports and the RBI's subsidy for non-resident Indians' US dollar deposits which boosted capital flows. However, whether this is sustainable remains to be seen. Placing curbs on gold imports is more of a short term measure and it is questionable whether this can go on for long given the increasing pressure to reduce these restrictions. The longer term solution would be to bolster exports by making them more competitive.