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Sensex Finishes Flat; Raymond Surges 6.4%
Wed, 5 Jul Closing

Indian share markets traded marginally higher in the afternoon session. At the closing bell, the BSE Sensex stood higher by 36 points, while the NSE Nifty finished up by 24 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 1% and 1.1% respectively. Losses were largely seen in software stocks and FMCG stocks. Realty stocks, metal stocks and energy stocks witnessed maximum buying momentum.

Raymond share price finished the trading day up by 6.4% in today's trade to Rs 815. The stock gained 14.5% in last six trading sessions and so far this year, it gained 62%. The company will invest a total of Rs 14 billion in a phased manner in its new plant at Amravati in Maharashtra which will go on stream by this year-end. The company has made an initial investment of Rs 2 billion for the first phase of the new unit that will produce cotton shirts, linen and denim, among others.

Asian stock markets finished higher today with shares in China leading the region. The Shanghai Composite is up 0.76% while Hong Kong's Hang Seng is up 0.52% and Japan's Nikkei 225 is up 0.25%. European markets are mixed. The CAC 40 is higher by 0.12%, while London's FTSE 100 is off 0.10%. Shares in Germany are unchanged.

The rupee was trading at Rs 64.72 against the US$ in the afternoon session. Oil prices were trading at US$ 46.30 at the time of writing.

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In news from economic sector, global ratings agency, Fitch ratings in its latest report has said that the newly launched one nation one tax, namely Goods and Services Tax (GST) is likely to remove domestic trade barriers and will boost revenue indirectly over the long term as it supports Gross Domestic Product (GDP) growth and encourages tax compliance.

But it also said that it poses significant short-term risks, emphasised by the late changes to the bill and the disruptive roll-out of demonetization. The ratings agency however said that it is 'far simpler' than the previous system, under which each state set its own sales taxes - in addition to the central government - and imposed border taxes on goods entering the state.

The rating agency also said that the unified national system should offer significant opportunities for productivity and added that it will become much quicker and less costly to move goods across the country now that trucks will not be held up at checkpoints at state borders.

It added that smoother logistics should reduce retailers' need for working capital and allow them to operate centralised warehouses, rather than in every state. Supply chains could extend, encouraging specialisation, now that there is less incentive to source goods within state border.

Moving on to news from NBFC stocks. HDFC share price finished the trading day down by 0.2% after the company said it has an exposure of Rs 9.09 billion to one of the accounts identified by the Reserve Bank of India's internal advisory committee for insolvency proceedings.

In June 2017, RBI's internal advisory committee had identified various accounts for reference under insolvency and bankruptcy code. Banks are referring these cases to the National Company Law Tribunal (NCLT). The total exposure of lenders to these 12 accounts are more than Rs 2 trillion.

In news from pharma stocks, Lupin share price surged 3.8% after the company launched generic version of Moxifloxacin Hydrochloride Ophthalmic solution used for treating bacterial conjunctivitis in the US market.

The launch follows receipt of approval from the US Food and Drug Administration (USFDA) earlier for Moxifloxacin Hydrochloride Ophthalmic solution 0.5%. The medicine is the generic equivalent of Novartis Pharma Corp's Vigamox Ophthalmic solution.

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

'Safe Haven' Pharma Sector in Decline since 2 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 overall 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:

Lupin Ltd traded in a very narrow range from August 2016 to April 2017. We mentioned in an earlier note that a big move was ahead if the stock could break either above Rs 1,520 or below 1,400. Our call was based on a signal from the Bollinger Band Width (BBW) indicator. The BBW indicator was trading at its life low, which indicated volatility in the days ahead.

Lupin finally broke the range on the downside. This indicated a huge move south. The stock has collapsed to a low of Rs 1,036, down 26% from Rs 1,400.

But today, after the stock hit a new 52-week low, it rallied strongly to end the session up 4%. Volumes were heavy, indicating buying interest. And the RSI indicator formed a bullish divergence with the price, indicating a loss of downside momentum.

So has the stock reversed or is this just a bear market bounce?

Lupin Recovered from 52-Week Low
Lupin Recovered from 52-Week Low 

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Feb 23, 2018 (Close)