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Midcap stocks in the limelight
Tue, 7 Jun 11:30 am

Indian stock markets continue to trade flat as investors remain cautious. Stocks from the realty and pharma space are trading firm while stocks from the capital goods and FMCG space are trading weak.

The BSE-Sensex is trading down by 5 points while NSE-Nifty is trading 2 points below the dotted line. BSE Midcap and BSE Small cap indicies are up by 0.3% each. The rupee is trading at 44.95 to the US dollar.

Energy stocks are trading mixed with Castrol and Essar Oil trading firm while Chennai Petroleum and Gujarat State Petronet are trading weak. As per a leading financial daily, Indraprastha Gas Ltd (IGL)-a venture of GAIL (India) Ltd, Bharat Petroleum Corp. Ltd and the Delhi government has increased prices of compressed natural gas (CNG). This is because the cost of sourcing gas is rising and the company has been feeling the pressure on its profits. India is currently facing a shortage of gas. Hence city gas distribution companies such as IGL are sourcing higher priced regasified liquefied natural gas (RLNG) to meet incremental demand. It may be noted that IGL has taken a price hike of about 55% for CNG in the last 18 months to negate the impact of the rising cost of RLNG. After the latest hike, the consumer price of CNG in Delhi would increase by 50 p per kg to Rs 29.80 per kg and by 55 p per kg in Noida, Greater Noida and Ghaziabad to Rs 33.40 per kg. The company put up a decent result for the quarter ended March 2011 (4QFY11). IGL's top line grew by 76% YoY as a result of higher volumes and realizations. However, net profits grew by only 34% YoY due to fall in gross spreads as a result of higher gas costs.

Pharma stocks are trading firm led by Cadila Healthcare and Strides Arcolab. As per a leading financial daily, Dr Reddy's Laboratories has launched 3 new generic products in the US. These products are Donepezil Hydrochloride tablets, Venlafaxine Hydrochloride extended release capsules and Letrozole tablets. Donepezil Hydrochloride tablets are generic versions of Eisai R&D Management Co's Aricept tablets. As per IMS Health, Aricept had a combined US sale of approximately US$ 2.3 bn for the twelve months ended March 31, 2011. Venlafaxine Hydrochloride extended release capsules are generic versions of Wyeth, LLC's Effexor XR extended release capsules. Effexor XR also had combined sales in the US of US$ 2.3 bn for the same period. On the other hand, Letrozole tablets which are generic versions of Novartis Corporations Femara tablets had brand sales of nearly US$ 702 m in the US market for twelve months ended March 31, 2011. This is a huge positive for the company and will considerably augment its sales from the highly competitive US generics market. It must be noted that the company is aiming to achieve overall revenues of US$ 3 bn by FY13 and the US is expected to be a key growth driver towards achieving this goal.

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