Indian stock markets languished in the red throughout today's trading session on the back of relentless selling activity across index heavyweights. The indices began the day's proceedings on a weak note and subsequent sessions saw them makign further inroads into the negative territory. There was no respite in the final trading hour either and the indices closed well below the dotted line. While the BSE-Sensex closed lower by around 309 points (down 2%), the NSE-Nifty closed lower by around 94 points (down 2%). The BSE Mid cap and the BSE Small cap were not spared either as they closed lower by 1.6% and 1.4% respectively. Losses were largely seen in metals and banking stocks.
As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 51.37 to the dollar at the time of writing.
As per a leading business daily, the Tata Group is looking to form a joint venture (JV) with Sounth African company Increase Coal (Pty) Ltd. The proposed venture can produce about 9 m tonnes of metallurgical coal which is used largely by the steel industry. This coal can also be exported to Tata Steel's subsidiary Corus, which is completely dependent on imports for its raw material. It must be noted that the Indian steel industry has been impacted by coal shortage as a result of which most companies are dependent on imports. Tata Steel has two coal mines in West Bokaro and Jharia, in Jharkhand. What makes South Africa attractive is that it is among the largest coal producers with a production cost relatively lower than in other countries. Currently, Tata Steel is 100% self sufficient in iron ore and 50% in coking coal i.e. 80% raw material security for Indian operations. The raw material security for the consolidated entity however stands at just around 22% as Corus doesn't have iron ore mines of its own. As a result, Tata Steel has been investing in certain projects across the world in order to increase its raw material security. The stock of Tata Steel closed in the red today.
Pharma stocks closed in the red today with the key losers being Cipla, Biocon and Dr. Reddy's. As per a leading business daily, the US FDA is expected to visit Dr.Reddy's Mexico unit for an inspection later this month. It must be noted that this facility had come under the scanner for not complying with certain manufacturing norms. As a result of which the FDA had issued an import alert on the plant. Dr.Reddy's had bought this facility a few years back to bolster its custom manufacturing business. This unit produces intermediates, active pharmaceutical ingredient (APIs) and steroids and is part of Dr.Reddy's Pharma Services & Active Ingredients (PSAI) business. This business faced heavy weather in FY09 and FY10 when the global downturn hampered the performance of global pharma players as a result of which they were reluctant to outsource manufacturing to Indian pharma companies. Despite the alert, Dr.Reddy's does not expect it to have a material long term effect on the company's Mexican operations. That said, how long will it take to resolve the issue remains to be seen given that players like Ranbaxy and Sun Pharma have still not seen an end to their problems on this front.