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Weak End to the Week; Auto & PSU Stocks Fall
Fri, 23 Jun Closing

Profit booking continued in the afternoon session in the Indian share markets amid weak European cues. At the closing bell, the BSE Sensex stood lower by 153 points, while the NSE Nifty finished down by 55 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished down by 1.2% and 1.5% respectively. Losses were largely seen in automobile stocks, PSU stocks and oil & gas stocks.

Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.33% and the Nikkei 225 rose 0.11%. The Hang Seng lost 0.02%. European markets are lower today with shares in London off the most. The FTSE 100 is down 0.45% while Germany's DAX is off 0.43% and France's CAC 40 is lower by 0.17%.

The rupee was trading at Rs 64.53 against the US$ in the afternoon session. Oil prices were trading at US$ 42.94 at the time of writing.

In news from software sector, amidst growing concern of protectionism, industry body National Association of Software and Services Companies (NASSCOM) has projected that India's Information Technology (IT) industry is expected to grow at the slowest pace in nearly a decade, as clients defer spending in the face of geopolitical uncertainties.

Software export growth in financial year 2017-18 is projected at 7-8% in constant currency terms, down from 8.6% in the fiscal 2016-17, in line with its forecast of 8-10%. In terms of the domestic market the body has said that there will be 10-11% growth from US$ 24 billion in FY17 to US$ 26-26.5 billion in FY18.

Noting that digital solutions and niche segments would be the key growth drivers, the industry's representative body said the revenue projection was based on improvements in financial services and high potential in digital business.

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Though, allaying fears of slowdown and job losses, NASSCOM Chairman Raman Roy said that the industry was expected to add 1.3-1.5 lakh jobs during the fiscal as it continued to be a net hirer with the demand for skilled professionals growing across its segments.

In a diversion from over dependence on US market, the industry body said that they are planning outreach activities in Japan, middle East, Africa, and China with focus on digital solutions. The industry association, however, admitted that it was imperative for new and existing talent to reskill to prepare for emerging job roles which required new skillsets.

Software stocks finished the trading day on a mixed note with Mindtree Ltd share price leading the gainers and Hexaware Ltd share price leading the losses.

Moving on to news from economic sector. Reserve Bank of India (RBI) Governor Urjit Patel has said that the news tax regime will expand the taxation base which in turn will lower the overall tax burden in the long-term terming the Goods and Services Tax (GST) as a precursor.

Apart from this, he also said that it will reduce many inefficiencies within states while moving goods from within a state and across the country.

He further said that GST network itself is part of the digitisation revolution, which along with the reforms on the information tax side in terms of the processes and operations, have the potential to broaden the tax base considerably. He asserted that the broadening of tax base is an important outcome of the new uniform taxation regime and other initiatives on e-payments and digitisation.

With a four-rate structure, the much-anticipated tax reform in Indian history, the GST is all set for a big launch on the midnight of June 30. All states and Union Territories, barring Jammu and Kashmir, have passed enabling laws for its implementation.

In news from pharma sector, Sun Pharma share price finished the trading day up by 1% on the BSE after one of the company's wholly owned subsidiaries has received final approval from USFDA for its Abbreviated New Drug Application (ANDA) for generic version of Zetia, (ezetimibe) Tablets 10mg.

These generic ezetimibe tablets are therapeutic equivalents of Merck's Zetia tablets. As per IMS, ezetimibe tablets had annual sales of approximately US$ 2.7 billion in the US for the 12 months ended April 2017.

In another development, Fortis Healthcare share price plunged 13% in today's trade after the company said in a notice to BSE that Integrated Healthcare Holdings (IHH) of Malaysia has abandoned its pursuit of Fortis Healthcare and SRL Diagnostics, dealing a body blow to the company's efforts to reduce their debt by selling off their healthcare assets.

'Safe Haven' Pharma Sector in Decline since 2 Years

The pharma sector, once considered a safe haven for investors has been on a steady decline over the past two years.

Facing pricing pressures in the domestic and export markets, currency fluctuations, as well as manufacturing issues related to their plant, there is a transformation happening in the sector as to how business is done and will be done in the future.

Recent disclosure of shareholding pattern at the end of March 2017 indicates the pessimism towards the sector. FII's have reduced their stake in giants like Sun Pharma, Lupin, Dr Reddy's and Cipla. These behemoths have seen a combined market cap erosion of around Rs 9,815.2 billion over the last one year.

And here's a note from Profit Hunter

The Nifty 50 Index traded on a volatile note during the week. On Monday, it opened its weekly session gap up and traded strongly to end the session 70 points up. But the buying interest did not last long and the index slipped to erase its gains over the next two days. On Thursday, the index again rallied 65 points in the first half of the session but gave up its entire gains in the second half - thus forming a shooting star candlestick pattern. The pattern indicates a short-term reversal top. Finally, on Friday, the index slipped 50 points more to end its weekly session down marginally.

As we mentioned in an earlier note, the 20-day exponential moving average (EMA) has been acting as good support for the index since January 2017. The index has now closed below this moving average. But the RSI indicator is still near its support zone.

So, if the index sustains below its 20 EMA, we might see short-term weakness. On the flipside, if the index closes back above its 20 EMA, the bulls might be back in action.

Nifty 50 Index Trades on a Volatile Note
Nifty 50 Index Trades on a Volatile Note 

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Jul 26, 2017 (Close)

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