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After opening the day flat, share markets in India witnessed negative trading activity throughout the day, and ended well below the dotted line. Sectoral indices ended the day in red, with stocks in the capital goods sector and stocks in the IT sector leading the losses.

At the closing bell, the BSE Sensex stood lower by 109 points (down 0.3%) and the NSE Nifty closed down by 35 points (down 0.3%). The BSE Mid Cap index ended the day down 1.2%, while the BSE Small Cap index ended the day down by 2.4%.

Asian stock markets finished in green. As of the most recent closing prices, the Hang Seng was up by 0.3% and the Shanghai Composite was up by 0.7%. The Nikkei 225 was up by 0.3%. Meanwhile, European markets, were trading mixed. The FTSE 100 was down by 0.5%, The DAX, was up by 1% while the CAC 40 was up by 0.6%.

The rupee was trading at Rs 67.19 against the US$ in the afternoon session. Oil prices were trading at US$ 74.32 at the time of writing.

Moving on to news from stocks in the pharma sector. Biocon share price was in focus today the pharma major and its global partner Mylan received approval from the United States Food & Drug Administration (USFDA) for the company's Fulphila.

The drug is a biosimilar version of Neulasta, and is indicated to reduce the duration of febrile neutropenia (fever or other signs of infection with a low count of neutrophils, a type of white blood cells) in patients treated with chemotherapy in certain types of cancer.

According to IQVIA sales data, Neulasta had annual sales of around US$4.2 billion in the US.

Fulphila is the first FDA-approved biosimilar to Neulasta and the second biosimilar from Mylan and Biocon's joint portfolio approved in the US, and the company anticipates launching in the coming weeks.

Following the news Biocon share price went up by over 6% and hit an all-time high. However, it ended the day lower by 6.9% amid profit booking.

Indian pharma companies catering to the US markets are breathing a sigh of relief. After being adversely affected by import bans and the suspension of new drug approvals from manufacturing facilities in the past three years, there has been a sharp pick-up in new drug approvals in FY17.

Expediting Drug Approval Process to be a Positive for Industry

However, note that USFDA alerts on Indian pharma companies have increased over the past few years. Regulators used to visit the plants every two years. Now they come every eight months. Increasing inspections have led to a total of 41 import alerts in the past eight years - 33 of them (80%) in just the last four years (2013-16). This clearly signifies increased USFDA scrutiny on Indian pharma firms. If that wasn't enough, increasing pricing pressure in the generics segment has dented realisations.

However, the recent development of USFDA expediting the drug approval process can bring some respite for Indian pharma companies. This comes as drug approvals for Indian companies have gone up 50% in the period from January to June 2017 compared to the same period last year.

While short-term pain is expected, companies with strong R&D capabilities and compliant plants will do well over the long term. The uncertainties make it important to be stock specific in the sector. It is important to look for companies that have the competence and staying power to overcome the challenges.

Pharma stocks ended the day lower by 1.4%.

Moving on to news about the economy. India's services sector witnessed contraction in May for the first time since February, hitting a three-month low, as rising price pressures led to a decline in new business orders.

India's dominant services industry activity showed signs of weakness as new business continued to suffer. The country's predominant sector witnessed contraction, with new orders falling due to rising costs, according to the Nikkei Services Purchasing Managers' Index (PMI) survey by Markit.

The Services PMI is the reading of the country's services sector output and is updated monthly. A reading above 50 indicates expansion, while any score below the mark denotes contraction.

A marginal rise in new business resulted in monthly increase in activity. The services PMI for May finished at 49.6, from 51.4 in April.

However, a bright spot was that business sentiment was the strongest since January 2015, rooted in expectations of improvements in demand conditions in the year ahead.

On the price front, input cost inflation accelerated to the strongest since November, while charges were raised to the greatest extent since July.

Retail inflation rose steadily at an annual pace of 4.6 % in April, above the Reserve Bank of India's medium-term target of 4%.

The data comes as the Reserve Bank of India's (RBI's) Monetary Policy Committee is set to meet tomorrow. Last quarter's faster growth, coupled with accelerating inflation, have dramatically changed expectations for the RBI monetary policy. It is now expected to change its stance to hawkish as early as a policy review on Wednesday and raise rates in August.

While retail inflation eased from December's a 17-month high, price rises are still above the RBI's medium-term target of 4% on rising energy costs and expectations for an increase in rural spending by the government.

The latest PMI data suggests that the recent surge in the price of oil, India's biggest import item, and a sharp weakness in the rupee will keep risks for inflation remain on the upside.

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