The Indian equity markets opened the day on a firm note, but in no time the markets slipped into red. Selling activity intensified on back of concerns over rise in crude prices due to disruptions in Iraq, dragging down the Indian indices. The BSE Sensex closed lower by 348 points and NSE Nifty closed down by 108 points. The small cap and mid cap indices witnessed selling pressures too. BSE Mid Cap and BSE Small Cap both closed down by 2.51% and 3.11 % respectively. Among the sectoral indices barring stocks from IT sector all the sectoral indices closed in red.
As regards global markets, Asian indices closed mixed today while European indices have opened weak. The rupee was trading at Rs 59.70 to the dollar at the time of writing.
Energy stocks ended the day on a weak note. Except for Petronet L&G and Gujarat Gas all the energy stocks registered huge losses for the day. The oil marketing trio of HPCL, BPCL and IOC lost in excess of 5% for the day. This was primarily due to concerns over supply disruption from Iraq fuelling worries of a rise in crude prices. In fact, the Brent crude was trading at 9 month high at the time of writing as market is expecting a production outage due to political tensions in Iraq. If production indeed suffers crude prices may rise further. This will negatively impact India as it imports majority of its crude requirements. Higher prices will increase the trade deficit, put pressure on Rupee and lead to rise in fuel inflation. All these factors are likely to affect economic growth of India.
Indian pharma stocks have ended the day on a weak note. Majority of Indian pharma stocks closed in red, with Orchid chemicals and Dishman pharma being the top losers. As per the financial daily, Swiss based company Roche and the Indian drug maker Cipla have decided to end the ongoing patent fight over Erlotinib drug in India. The drug in issue is indicated for the treatment of cancer patients. Both the companies have entered into talks and decided to settle the matter. Reportedly, the said development came after a division bench of Delhi high court in April referred the companies to arbitration. Both the companies are working on various options for the settlement of the patent challenge. While it has been quite normal in various markets especially in US where the generic and innovator companies enter into settlement in order to bring end to patent challenges. However this type of settlements have hardly taken place in the Indian pharma market. In past Cipla has launched various drugs which have patent protection and has been litigated by innovator companies. This settlement might also encourage settlement among various companies who are fighting patent litigations in India .