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Indian Indices Trade in Red; Pharma Stocks Witness Buying
Mon, 12 Jun 01:30 pm

After opening the day lower, share markets in India have continued the downtrend and are currently trading below the dotted line. Sectoral indices are trading on a mixed note with stocks in the realty sector and stocks in the pharma sector trading in green, while stocks in the capital goods sector are leading the losses.

The BSE Sensex is trading down by 164 points (down 0.5%), and the NSE Nifty is trading down by 51 points (down 0.5%). Meanwhile, the BSE Mid Cap index is trading down by 0.4%, while the BSE Small Cap index is trading down by 0.3% The rupee is trading at 64.36 to the US$.

In news from stocks in the pharma sector. Bucking the overall market sentiment, the pharma sector is trading higher today. Cadila Healthcare share price is among the top gainers on the bourses, up by 3% intraday and is trading near all-time high levels. Notably, the stock has been consistently breaching its all-time highs since the last week.

The up move was triggered as Cadila Healthcare announced its subsidiary Nesher Pharmaceuticals had received final approval form the US Food and Drug Administration (USFDA) approval to market Nystatin topical powder in the US.

Nystatin Topical Powder is an antifungal antibiotic used to treat skin infections caused by yeast. It will be produced at the Nesher Pharmaceuticals' manufacturing facility located at St. Louis, MO, USA.

Last week, the company received final approval from USFDA to market Mesalamine tablets, which is used for the treatment of mild to moderate ulcerative colitis. The drugmaker has over 117 approvals and 300 ANDAs since the commencement of the filing process in FY04.

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At the time of writing, Cadila Healthcare share price was trading up by 2.5%.

Recenly, Cadila Healthcare Ltd has become India's second-most valuable pharmaceutical company in terms of market capitalization, beating drug makers like Lupin Ltd, Dr Reddy's Laboratories Ltd and Cipla Ltd that have much higher revenues. Sun Pharmaceuticals Industries continues to be the most valued pharma company in India with a market cap of Rs 1.22 trillion.

The Indian pharmaceutical industry has come under a lot of regulatory pressure in the past few years.

The sector has faced great volatility over the years.

Volatility in the Pharma Sector

We had written about the current predicament of Indian pharma companies in one of the premium editions of the 5 Minute WrapUp:

  • Over the past few years, risk in the US markets has increased. The US Food and Drug Administration has become stricter on products entering US borders. Surprise inspections have increased and companies are being issued warning letters. This has impacted the business and earnings of Indian pharma players, causing major volatility for the sector.

However, such gloom and doom scenarios are bound to create opportunities in select safe stocks. The prudent thing to do is to remain focused and patient for both opportunities to come as well as to play out completely.

In news from stocks in the auto sector. Tata Motors share price is among the top losers on the bourses today after the company announced weak global wholesale sales in May.

Tata Motors Group global wholesales in May 2017, including Jaguar Land Rover (JLR), were at 86,385 units, lower by 1%, over May 2016.

Global wholesales of all commercial vehicles and Tata Daewoo range in May 2017 were down 13% at 28,310 units, while global wholesales of all passenger vehicles in the month increased 6% to 58,075 units in the month.

However, sales of luxury brand JLR grew 2% in May, compared to the same period last year.

The company expects sales to pick up going forward as the all-new Discovery model continues to go on sale across the world, particularly in China and North America, two of Jaguar Land Rover's biggest markets.

In related news, according to an article in Livemint, Tata Motors is planning to raise over Rs 5 billion by selling bonds in the local market to refinance bank loans.

Tata Motors last sold bonds in March this year, raising Rs 5 billion through bonds maturing in September 2021 at a coupon of 7.84%.

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