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Indian Share Markets Extend Gains; Energy & PSU Stocks Rally
Mon, 28 May 12:30 pm

Stock markets in India continue to trade higher taking cues from their key Asian counterparts. Sectoral indices are trading in green with stocks in the oil & gas sector and PSU sector witnessing maximum buying interest.

The BSE Sensex is trading up by 254 points (up 0.7%), and the NSE Nifty is trading up by 82 points (up 0.8%). Meanwhile, the BSE Mid Cap index and the BSE Small Cap index both are trading up by 1.4%. The rupee is trading at 68.26 to the US$.

In the news from the engineering sector. Larsen & Toubro's (L&T) construction arm - L&T Construction's Water & Effluent Treatment Business has bagged orders worth Rs 57 billion.

Reportedly, two major orders from Narmada Valley Development Authority (NVDA), government of Madhya Pradesh, are for execution of the Indira Sagar Project - Parwati Phases I & II and Kalisindh Phase I Micro Lift Irrigation Schemes.

The project will provide water for micro-irrigation to 2 lakh hectares of Culturable Command Area in Dewas, Sehore and Shajapur districts of Madhya Pradesh, by lifting 32.04 cumecs of water from the Indira Sagar Project reservoir.

The scope of work includes survey, design, procurement, construction and installation of pumping systems, rising mains, transmission and distribution pipeline networks, electrical power transmission line and automation system by SCADA.

Recently, the company's construction arm - L&T Construction's Transportation Infrastructure business has won a major Design & Build order from the Dhaka Mass Transit Company (DMTC) worth Rs 31.9 billion for Electrical & Mechanical Systems Package of Dhaka Mass Rapid Transit Development Project (MRT - Line 6).

Notably, diversification continues to help L&T negotiate and get better terms and margins for projects. Apparently, this is because it is less desperate to win orders as compared to a company which are present in only a couple of sectors. Its reputation, extensive technical prowess, and large skilled workforce have enabled L&T to command a certain premium from customers and vendors alike.

Whether, further addition to these new projects provides a cushion to its profitability will be an interesting thing to watch out for going forward.

To know more about the company, you can access to L&T's latest result analysis and L&T stock analysis on our website.

L&T share price was trading up by 2.2% at the time of writing.

Moving on to the news from pharma sector. As per an article in a leading financial daily, Zydus Cadila has received the final approval from the US Food and Drug Administration (USFDA) to market Nystatin Ointment USP, 100,000 units per gram.

It is used as an adjunct to treat fungal skin infections and will be manufactured at the group's Topical manufacturing facility at Ahmedabad.

The group also received the final approval to market Omeprazole and Sodium Bicarbonate Capsules, 20 mg/1100 mg and 40 mg/1100 mg. It is used to treat certain stomach and esophagus problems (such as acid reflux, ulcers).

Reportedly, it will be manufactured at the group's formulations manufacturing facility at Moraiya, Ahmedabad.

The group now has more than 190 approvals and has so far filed over 320 ANDAs since the commencement of the filing process in FY 2003-04.

Speaking of pharma sector, did you know the BSE Healthcare Index is down 20% over the past three years? During the same period, the BSE Sensex is up 21%.

The BSE Healthcare Index has underperformed the Sensex

And this was a sector they called 'evergreen'.

Have Investors boarded a plane that's about to crash? Or is it just turbulence on the way to a smooth and safe landing?

It's important to understand the core issues. Regulatory problems for pharma companies have increased over the past few years. The frequency of visits as well as quality expectations have increased a lot.

While we expect the pain to continue in the short-term, the long-term picture still looks bright.

Stricter norms and pricing pressure will ensure only quality players remain. Companies with strong R&D facilities and quality compliant plants will have an edge over the others.

Cadila Healthcare share price was trading down by 3.7% at the time of writing.

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