After trading firm during the previous two hours of trade Indian stock market indices have extended their gains on the back of strong buying interest across sectors. Stocks from the IT and FMCG space are trading strong while those from the auto space are trading marginally in the red.
Currently, the BSE-Sensex is up by 177 points while NSE-Nifty is trading 45 points above the dotted line. BSE Midcap and BSE Small cap indices are both up by 0.02% and 0.40% respectively. The rupee is trading at 44.64 to the US dollar.
Pharma stocks are trading mixed with Dr Reddy's and Fresenius Kabi leading the gains. However, Orchid Chemicals is trading weak. Dr Reddy's Laboratories Ltd (DRL) has finally completed the acquisition of GlaxoSmithKline's (GSK) oral penicillin facility and product portfolio in the US. It may be noted that the two companies had signed an agreement towards the same on 23 November 2010. After the acquisition DRL now has the ownership for the penicillin manufacturing site in Bristol and Tennessee. It also has the rights for the two brands, Augmentin and Amoxil in the US. However, GSK will retain the rights of these brands outside the US. It may be noted that the financial terms of the said transaction have not been disclosed. The acquisition of GSK brands was done to scale up the generic business of DRL in North America. This is likely to provide additional synergy to the business.
Real estate stocks are trading mixed with Sobha Developers and Atlanta Ltd leading the gains. However, Mahindra Lifespace Developers and Orbit Corporation are trading weak. Amidst fall in volumes real estate companies have started negotiating with banks to postpone their repayment deadlines. It may be noted that the real estate companies have already rescheduled Rs 60 bn worth of loans in the past 3 months. And considering the current market conditions further rescheduling cannot be ruled out. It may be noted that these companies do not have adequate cash flow in order to meet the repayment schedules. And they are not willing to lower the prices of the housing units as well so as to address the liquidity issue. This has led to a series of restructuring in the repayment schedules. Even banks have no viable option but to agree to the new repayment schedule as they do not want their loans to be classified as an NPA . Prominent banks who have a huge real estate loan portfolio include PNB, SBI, Bank of Baroda and OBC.