Sensex Plunges 488 Points; Realty and Energy Stocks Witness Selling

Wed, 8 May Closing

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   09:30 am   

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India share markets witnessed huge selling pressure during closing hours and ended their trading session deep in the red. Most of the losses were seen on the back of weak global cues.

At the closing bell, the BSE Sensex stood lower by 488 points (down 1.3%) and the NSE Nifty closed down by 138 points (down 1.2%).

The BSE Mid Cap index ended the day down 1%, while the BSE Small Cap index ended the day down 1.2%.

Sectoral indices ended in the red with stocks in the realty sector and energy sector witnessing most of the selling pressure.

The rupee was trading at 69.62 against the US$.

Asian stock markets finished deep in the red. As of the most recent closing prices, the Hang Seng was down by 1.2% and the Shanghai Composite was down by 1.1%. The Nikkei 225 was down 1.5%.

European markets were also trading on a negative note. The FTSE 100 was down by 0.4%. The DAX was trading down by 0.2%, while the CAC 40 was down by 0.3%.

BSE share price was in focus today as the company's board approved buyback of 67.7 lakh shares.

The company plans to buy back its fully paid up equity shares of Rs 2 each at Rs 680 per equity share through tender offer route. The total amount of buyback size will be a maximum of Rs 4.6 billion.

The company proposes to buy back 67.64 lakh equity shares an offer price, representing 13.06% of the total paid-up equity capital. The buyback offer size represents 24.73% of aggregate of the total paid up capital and free reserves.

Apart from the above, the company also reported standalone net profit of Rs 2 billion during 2018-19. The operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) was Rs 253 million as per standalone results.The board of the company also recommended payment of dividend of Rs 25 per equity share of face value of Rs 2 each.

After taking into account the interim dividend of Rs 5 per share paid in the month of December 2018, the total dividend for the financial year stands at Rs 30 per equity share of face value of Rs 2 each.

In the news from the banking sector, Yes Bank share price was in focus today. The stock of the lender continued its downtrend and was down over 2% in morning trade today.

This is the third consecutive session the stock has been witnessing selling pressure.

Note that the stock has been in the negative territory since last Monday, May 6, 2019 after domestic rating agency ICRA downgraded the bank's long-term bond ratings and gave a guidance with a negative outlook.

Speaking of the banking sector, if there is any private sector bank that has severely underperformed in the last two years, it has to be Lakshmi Vilas Bank (LVB).

Look at the chart below.

Lakshmi Vilas Bank Down 60% from Its 2017 High

Here's what Sarvajeet Bodas wrote about this in the recent edition of The 5 Minute WrapUp...

• LVB declined by more than 50% in the last 2 years compared to the overall BSE Bankex showing gains of about 30%.
  
  Here's another interesting data.
  
  If you look at the shareholding pattern of LVB during this 2-year time frame, retail investors (Individual share capital up to Rs. 2 Lacs) have increased by 15%. The number of shares owned by them increased by 24%.

This is a typical example of retail investors catching a falling knife!

In the news from the pharma sector, Natco Pharma share price was in focus today as the company said its marketing partner Alvogen has received final Abbreviated New Drug Application (ANDA) nod from the US Food and Drug Administration (USFDA) for chest pain tablets.

The company in its BSE filing said that its marketing partner Alvogen has received the final approval of ANDA from the USFDA for Nitroglycerin Sublingual Tablets USP, 0.3 mg, 0.4 mg, and 0.6 mg.

Nitroglycerin sublingual tablets are used to treat episodes of angina (chest pain) in people who have coronary artery disease (narrowing of the blood vessels that supply blood to the heart).

As per the data, the company stated that Nitroglycerin sublingual tablets had total annual sales of around US$ 77.3 million in the US market for the year ending 2018.

Speaking of pharma sector, note that the BSE Healthcare Index has been on a roller coaster ride in the past few years. The period from 2012 to 2015 saw the index go up more than three times.

And since then it has been a painful ride downwards.

As we wrote in one of our editions of The 5 Minute WrapUp...

• Pre-2015, pharma companies enjoyed a fairytale ride in the US market. Low labor costs, good chemistry skills, along with efficiency, ensured Indian companies could copy innovator drugs to make generic drugs at a fast pace.
  
  The generic business had lucrative margins for all major pharma players. But the party did not last long. In the quest to supply drugs quickly, they compromised on quality at their manufacturing facilities.
  
  No wonder, the US regulatory authority (USFDA) took strict action. Sun Pharma received a warning letter for its Halol manufacturing facility in 2015. It was like a bolt out of the blue. Since then, the downward spiral began and has continued till date.

We believe that pharma companies that invest in creating a pipeline of complex generics or building competencies in alternative dosage forms are better equipped to tackle the changing dynamics in the US generics market as well as in the overall industry.

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.

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