Sensex Ends Day in Green; Power Stocks Top Gainers

Tue, 3 Apr Closing | Parth Parekh, TM Team

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After opening the day flat, share markets in India witnessed volatile trading activity throughout the day and ended the day in green. Sectoral indices too ended the day in green, with stocks in the power sector and stocks in the infra sector leading the gains.

At the closing bell, the BSE Sensex stood higher by 115 points (up 0.4%) and the NSE Nifty closed up by 33 points (up 0.3%). The BSE Mid Cap index ended the day up 0.9%, while the BSE Small Cap index ended the day up by 1.4%.

Asian stock markets finished mixed. As of the most recent closing prices, the Hang Seng was up by 0.3% and the Shanghai Composite was down by 0.8%. The Nikkei 225 was down by 0.5%. Meanwhile, European markets were trading on a negative note. The FTSE 100 was down by 0.1%, The DAX, was down by 1% while the CAC 40 was down by 0.5%.

The rupee was trading at Rs 65.04 against the US$ in the afternoon session. Oil prices were trading at US$ 63.32 at the time of writing.

In news from the manufacturing sector. Activity in India's manufacturing sector expanded at its weakest pace in five months in March as order and production growth slowed, discouraging firms from hiring.

According to the Nikkei Purchasing Managers' Index (PMI) survey by Markit, India's manufacturing continued to slow down the pace of expansion in March after growing marginally in February.

The PMI is the reading of the country's manufacturing sector output and is updated monthly. A reading above 50 indicates expansion, while any score below the mark denotes contraction.

PMI in March stood at 51, a decline from the 52.1 reading in February, however indicating an expansion. Notably, the PMI reading in March was its lowest point since October last year, owing to slowing demand across the sector.

Manufacturing Activity Continues Expansion in September

Orders softened despite manufacturers keeping price increases to a minimum, suggesting retail inflation will remain near the Reserve Bank of India's medium-term target of 4% and reinforcing views it will hold interest rates steady this year.

On the prices front, survey noted that the recent build-up of inflationary pressures eased in March, with softer increases in both input costs and output prices recorded.

Though Indian manufacturers remained cheerful about growth prospects, worries about the possibility of unexpected policy decisions and a risk of an international trade war weighed on confidence.

Moving on to news from stocks in the pharma sector. ended the day on an encouraging note after the company's plant received a regulatory approval.

The company's Pithampur unit 2 facility located in Indore was cleared by Health Canada - the Canadian drug regulator, after a review.

Following the review, Health Canada has maintained the compliant rating for unit 2 at Pithampur (Indore) and has issued a revised 'Establishment License'.

In November 2017, Lupin had received warning letter from US Food and Drug Administration (USFDA) for its manufacturing facilities in Goa and Pithampur, Indore.

Indian pharma companies catering to the US, and North American markets are breathing a sigh of relief. After being adversely affected by import bans and the suspension of new drug approvals from manufacturing facilities in the past three years, there has been a sharp pick-up in new drug approvals in FY17.

However, note that USFDA alerts on Indian pharma companies have increased over the past few years. Regulators used to visit the plants every two years. Now they come every eight months. Increasing inspections have led to a total of 41 import alerts in the past eight years - 33 of them (80%) in just the last four years (2013-16). This clearly signifies increased USFDA scrutiny on Indian pharma firms. If that wasn't enough, increasing pricing pressure in the generics segment has dented realisations.

However, the recent development of USFDA expediting the drug approval process can bring some respite for Indian pharma companies. This comes as drug approvals for Indian companies have gone up 50% in the period from January to June 2017 compared to the same period last year.

While short-term pain is expected, companies with strong R&D capabilities and compliant plants will do well over the long term. The uncertainties make it important to be stock specific in the sector. It is important to look for companies that have the competence and staying power to overcome the challenges.

And here's a note from Profit Hunter:

MRF Ltd. is among the most active stocks in the market today - up 3%.

Do you remember the last time we reviewed the stock, it had broken out of the symmetrical triangle pattern and touched a new life-time high.

It continued to trend upwards and achieve a fresh life-time high of 74,147 in June 2017. It then consolidated for a while in an ascending triangle pattern.

Today, the stock broke out of this pattern to make another life-time high of 75,799. The volumes are also healthy, indicating strong buying interest.

Does this indicate that the stock has now resumed its uptrend? Let's keep a close watch on it...

MRF at a New Life-time High

 

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