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After trading positive for the majority of the day, Indian equity markets came under pressure in the final hour of trade and finished flat due to heavy selling in IT, realty and capital goods' stocks. At the closing bell, the BSE Sensex closed higher by 36 points, the NSE Nifty finished flat. The S&P BSE Midcap and the S&P BSE Small Cap finished down by 0.5% respectively. Gains were seen in banking, oil & gas and metal stocks.
Most major Asian markets advanced, taking cues from overnight gains in Wall Street. However, Chinese stocks fell and extended losses from the previous session. The Nikkei 225 gained 2.70% and the Hang Seng rose 1.82%. The Shanghai Composite lost 0.66%. European markets are lower today with shares in London off the most. The FTSE 100 is down 0.51% while France's CAC 40 is off 0.21% and Germany's DAX is lower by 0.09%.
The rupee was trading at 66.29 against the US$ in the afternoon session. Oil prices were trading at US$ 44.22 at the time of writing.
Pharma stocks finished on a mixed note with Divi's Laboratories and Piramal Enterprises leading the gains. Shares of Glenmark Pharmaceuticals dropped 1.2% today after it was reported that the company has received three observations from the US health regulator (Subscription Required) for its Pithampur, Indore plant. Subsequently the company received two product approvals from this plant. The Pithampur-based formulations facility manufactures oral solids, semi solids and injectables.
Glenmark has a significant presence in branded generics markets. Its subsidiary Glenmark Generics has robust presence in the US business. The company has 16 manufacturing facilities in five countries and six R&D centres across the globe.
In another development, Biocon Inc, part of biotechnology major Biocon, is recalling in the US 5,505 bottles of Simvastatin tablets for being sub-potent according to USFDA. Reportedly, the Class III recall for 5 mg tablets of simvastatin pertains to a specific lot manufactured by Blu Caribe (Puerto Rico, USA) for Blu Pharmaceuticals (Kentucky, USA) long before Biocon acquired the simvastatin ANDA from Blu. The FDA notified Biocon as they are the current holders of the ANDA. Biocon finished the trading day on a negative note (down 3%) on the BSE.
Recently, the Indian Health Ministry announced a ban on 344 fixed dosage combination (FDC) drugs. The ban came after an expert committee's recommendation. The pharma companies will have to suspend the manufacturing and sale of drugs that fall into this category, including cough syrups, analgesics, and antibiotic combinations. In our recent edition of The 5 Minute WrapUp Premium, we explain how the FDC's pose a new challenge for the pharma companies (Subscription Required).
Moving on to news from energy sector. According to an article in the Reuters, State-run GAIL (India) Ltd has been seeking to swap some of its contracted gas supplies from Sabine Pass Liquefaction in the United States to reduce shipping costs. The company wants to swap LNG on a FOB basis with firms that have customers in countries in which LNG trade is not prohibited by US law and sanctions.
In exchange GAIL is seeking equivalent supplies on a delivered basis at Indian regasification terminals at Dahej and Dabhol in western India. GAIL has a contract to buy 3.5 million tonne a year of liquefied natural gas from Sabine Pass on a FOB basis for 20 years. The supplies are expected to begin from the first quarter of 2018.
The company has two US deals - one with Cheniere Energy Partners to buy 3.5 million tonnes a year of LNG from Sabine Pass Liquefaction, a subsidiary of Cheniere, and another a 20-year sales and purchase agreement with Dominion Resources for supply of 2.3 million tonnes per annum. Supplies from both deals begin in 2018. Reportedly, GAIL also holds a 20% stake in Carrizo's Eagle Ford Shale acreage in the US. Of the US volumes, the company has sold 2 million tonnes of LNG to overseas users.
Also, GAIL has successfully completed the first phase of replacement of pipelines in the KG Basin regional network by investing Rs 9.96 billion. The company had suffered a major setback in 2014 following a blast at Nagaram of Mamidikudu mandal in East Godavari district that resulted in snapping of gas supply to all private power plants in Andhra Pradesh and the AP Power Generation Corporation. GAIL finished up by 0.3%.
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