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Sensex, Nifty Finish Weak as U.S. Strikes Syria; Pharma Stocks Hit the Worst
Fri, 7 Apr Closing

Indian share markets edged lower in the afternoon session tracking global markets as geopolitical concerns grew after the US launched cruise missiles against an air base in Syria. At the closing bell, the BSE Sensex stood lower by 221 points, while the NSE Nifty finished down 64 points. Meanwhile, the S&P BSE Mid Cap and the S&P BSE Small Cap finished down by 0.3% and 0.5% respectively. Losses were largely seen in pharma stocks, metal stocks and realty stocks.

Shares of oil marketing companies advanced in today's trade amid reports that the state-run companies may review fuel rates on a daily basis to align them with international prices.

Indian Oil Corporation share price surged 3.1%, BPCL share price finished 4.6% up and Hindustan Petroleum Corporation share price finished up by 2.2%.

Asian stock markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.36% and the Shanghai Composite rose 0.17%. The Hang Seng lost 0.03%. European markets are mixed to lower. Shares in Germany are off as the DAX drops 0.52%. The CAC 40 is down 0.34% while the FTSE 100 in London is unchanged.

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The rupee was trading at Rs 64.39 against the US$ in the afternoon session. Oil prices were trading at US$ 52.51 at the time of writing.

Moving on to news from stocks in pharma sector. Cipla share price finished the trading day up 0.1% on the NSE. It was reported that the company's wholly owned subsidiary in USA - Cipla USA Inc., has signed a worldwide licensing agreement (except for East Asia) with MEDRx Company (MEDRx) to further develop and commercialize MRX-4TZT, a Tizanidine patch for the management of Spasticity.

Under the terms of the agreement, MEDRx is eligible to receive up to US$30 million cumulatively through upfront and developmental, regulatory, and commercial milestones payments. MEDRx will also receive tiered royalties on the net sales of commercialized licensed products.

Meanwhile, according to an article in The Economic Times, the government plans to review the existing drug price control measures to make medicines more affordable. The center also plans to undertake "reengineering" of price regulator National Pharmaceutical Pricing Authority (NPPA) so as to bring greater transparency amid allegations from the industry over arbitrary implementation of policy.

In March this year, Minister of State for Chemicals said in a written reply to the Lok Sabha that since its inception, the NPPA has issued 1,527 demand notices to companies for overcharging on sales of formulations at prices above the notified ceiling price.

Earlier, expressing concern over future of the pharma sector in India, the Indian Pharmaceutical Alliance (IPA) had said pharma companies have become a victim of "unbridled turf war" between the Department of Pharma and drug price regulator NPPA.

Pharma stocks finished on a weak note with Sun Pharma share price and Lupin Ltd share price leading the losses.

In news from steel sector, JSW Steel plans to spend up to US$ 1 billion on capacity expansion or acquisitions this year. The company also plans to bid for iron ore and coking coal mines in upcoming auctions to secure raw material supplies.

Reportedly, JSW Steel registered a 26% increase in annual crude steel production at 15.80 million tonne (mt), its highest ever, marginally surpassing its target of 15.75 mt set at the beginning of last fiscal.

It produced 11.41 mt (9.31 mt) of flat product and 3.21 mt (2.73 mt) of long product in FY17. The company's performance comes on the back of dumping of low cost steel during major part of last year with notebandi of high value currency delivering the last blow in November.

Despite testing times, JSW Steel added five million tonne capacity last year with investment of Rs 43 billion to increase its capacity to 18 mtpa.

The company had to sell a major portion of its incremental production in the international market as the domestic demand has not kept pace with rising production. Higher production in the March quarter may not result in substantial rise in profits as the company had to use high cost coal inventory.

Meanwhile, Steel Authority of India (SAIL) is also aiming double digit growth in 2017-18 by greater synergy amongst various units that would result in maintaining traction of the previous fiscal.

No Takers For Domestic Steel

The government's proposal to give domestic steel makers a preference in government projects should protect them from cheaper imports. In February, domestic steel output rose by 12.9% YoY, as large private steel producers such as Tata Steel and JSW Steel ramped up output. Imports during the first eleven months of FY17 dropped by 39% YoY.

But the bigger concern is weak consumption growth. The consumption data over the past few months clearly show that there are no takers for domestic steel. So steel makers have been forced to export more, with overseas shipments up by 78% YoY in the fiscal till February.

JSW Steel share price and SAIL share price finished down by 2.6% and 1.6% respectively.

And here's a note from Profit Hunter:

The Indian rupee hit a 20-month high against the US dollar after the Reserve bank of India's (RBI) announced its monetary policy yesterday.

The rupee hit an all-time low of 69.22 in August 2013. It attempted to re-test this level twice, in February 2016 and November 2016, going as low as 68.78 and 69.04 respectively.

After hitting a low of 69.04, the rupee rebounded strongly. And today, it is trading at its 52-week high of 64.20.

But now, USDINR is approaching its important support zone of 64, as seen by the green horizontal line in the chart below.

The RSI indicator also hit a five-year low and is now on the verge of forming a bullish divergence with price.

So will the support zone and RSI bring a reversal to the USDINR trend, or will the dollar slip even further against the rupee?

Indian Rupee Hits 20-Month High
Indian Rupee Hits 20-Month High 

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S&P BSE SENSEX


Aug 22, 2017 03:26 PM

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