Auto drives down markets

Mon, 16 May 11:30 am

   Previous Close   

   Pre-Open   

   09:30 am   

   01:30 pm   

   Closing   

Indian stock markets continued to sink deeper in the red on sell off in heavy weights over the last two hours of trade. Stocks from the auto and metals space are trading weak while stocks from the healthcare space are trading firm.

The BSE-Sensex is down by 153 points while NSE-Nifty is trading 37 points below the dotted line. BSE Midcap index is down by 0.5% while BSE Small cap index is trading 0.3% below Monday's closing. The rupee is trading at 45.05 to the US dollar.

Pharma stocks are trading firm led by Glenmark Pharma and Wockhardt. As per a press release by Glenmark Pharma, its wholly owned subsidy Glenmark Pharmaceuticals SA has entered into a license agreement with global pharma major Sanofi for development and commercialization of GBR500. GBR 500 is a monoclonal antibody to treat Crohn's disease as well as other chronic autoimmune disorders.

As per the agreement, Glenmark will receive an upfront payment of US$ 50 m from Sanofi. This payment includes US$ 25 m on closing of the deal and the remaining US$ 25 m on assessment by Sanofi of certain data to be provided by Glenmark. In addition to the payment, Glenmark could potentially receive payment for success-based development and regulatory and commercial milestones. As per the agreement, Sanofi will have the exclusive marketing rights for North America, Europe, Japan, Mexico, Argentina, Chile and Uruguay. In addition, the company will have co-marketing rights in Brazil, Russia, Australia and New Zealand. Glenmark would receive double-digit royalties on sales of products under this license. For India and rest of the world, Glenmark will have exclusive marketing rights.

Hotel stocks are trading mixed with Oriental Hotels and Country Club trading firm while Indian Hotel and Hotel Leelaventure are trading weak. As per the Chairperson and CEO of EIH Limited, Mr P.R.S Oberoi, 60% of the company's business in 10 years time will come from management contracts. This is as the company is shifting its focus away from owning real estate. However, the company will develop the land it already owns. EIH which owns around 30 properties under the Oberoi and Trident brands has recently began to take up hotels on management contract. In this business model, hotel companies operate their brands in properties owned by someone else for a fee. EIH is currently charging a management contract fee of 12-16% of net profits. EIH operates in the five star (Trident) and luxury (Oberoi) segments and plans to continue to operate in these segments only.