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Sensex Ends Lower; Vedanta & Kotak Mahindra Top Losers
Mon, 18 Jun Closing

Indian share markets ended marginally lower on Monday amid weak global cues. The BSE Metal index, however, lost 1.7 amid rising global trade war fears. At the closing bell, the BSE Sensex finished lower by 74 points and the NSE Nifty finished down by 18 points. Meanwhile, the S&P BSE Midcap Index ended down by 0.2% while S&P BSE Small Cap Index ended down by 0.8%.

Sectoral indices ended the day on a mixed note with metal stocks and IT stocks leading the losses. While, energy stocks & automobile stocks ended the day in green.

Globally, Asian stock markets finished lower today with shares in Japan leading the region. The Nikkei 225 was down 0.8% while China's Shanghai Composite was off 0.7% and Hong Kong's Hang Seng was lower by 0.5%. European markets are lower today with shares in Germany off the most. The DAX is down 0.6% while France's CAC 40 is off 0.6% and London's FTSE 100 is lower by 0.1%.

The rupee was trading at Rs 68.02 against the US$ in the afternoon session.

A falling tide lowers all boats, it seems. In the latest development, amid an exodus from emerging markets, investors are pulling out of even Asian economies with solid prospects for growth and debt financing.

Overseas funds are pulling out of six major Asian emerging equity markets at a pace unseen since the global financial crisis of 2008 -- withdrawing US$19 billion from India, Indonesia, the Philippines, South Korea, Taiwan and Thailand so far this year, according to data compiled by Bloomberg.

In another development, in a major boost to the government, India's exports grew 20.2% to US$28.9 billion in May, recording the highest number in six months.

Even though exports outpaced imports, higher oil import bill wiped away the benefits of a contraction in gold imports. Imports were up 14.9% to US$43.5 billion.

As per the ICRA report, based on the available data for April-May 2018, the current account deficit may widen to US$15-16 billion or around 2.4% of GDP in the ongoing quarter, from US$14 billion in Q1FY18, with higher commodity prices counteracting the likely contraction in gold imports.

India's trade deficit widened US$14.62 billion from US$13.84 billion in May 2017. Oil imports were up 49.5% to US$11.5 billion on back of a surge in international crude prices.

Meanwhile, according to an SBI report released last week said that India should try to tap sectors such as pharmaceuticals and agriculture - particularly in commodities like rice - in the Chinese market with an aim to bridge the widening trade gap.

Once India is able to tap those (agriculture and pharma) markets and increase its exports, the trade deficit will be quite balanced. In FY17, India's trade deficit with China expanded to US$51.11 billion from US$38.72 billion in FY13.

Furthermore, data showed that the trade deficit further widened to US$62.94 billion in FY18. While India is looking to export more, China is looking to import more. Amid fears of trade war under the protectionist policy of US President Donald Trump, China is planning to hold its first import-only fair later this year.

Mvoing on to the news from pharma sector. Lupin and Nichi-lko have entered into an agreement for the distribution, promotion and sale of Lupin's recently-filed biosimilar Etanercept (YLB113) in Japan.

Developed by YL Biologics, a joint venture between Lupin's subsidiary Lupin Atlantis Holdings SA(LAHSA) and Yoshindo, the product will be launched by Nichi-lko after receiving approval from the Pharmaceuticals and Medical Devices Agency (PMDA).

Kyowa (Lupin's subsidiary in Japan) had submitted a New Drug Application (NDA) for Marketing Authorization to the Pharmaceuticals and Medical Devices Agency (PMDA) in March this year following the successful conclusion of its global Phase III study.

The study was a multinational randomized double-blind controlled trial of 52 weeks' duration which included more than 500 patients with rheumatoid arthritis (RA) in 11 countries.

In addition to Japan, Lupin has also submitted the Marketing Authorization Application (MAA) for its Etanercept biosimilar to the European Medicines Agency (EMA).

The indications targeted for approval are Rheumatoid Arthritis (RA), Psoriatic Arthritis, Ankylosing Spondylitis, Axial spondyloarthritis, Non-radiographic Axial Spondyloarthritis and Plaque Psoriasis. The ex-US market for Etanercept is estimated at US$4 billion in Japan and Europe, along with other regulated and emerging markets.

One shall note that, Biosimilars and Biologics are burgeoning sectors. Also, major scientific and technological advances, coupled with socio-demographic changes and increasing demand for medicines will revive the pharma industry's fortunes in another 10 to 20 years.

But given the complexity of biologics, will Indian companies be able to break some ground in this space? (Subscription Required). Going forward, whether the monetization of biosimilars prove to be a big growth driver for the company will be the key thing to watch out for.

Lupin share price ended the day down by 0.5%.

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.

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