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Railway budget drags indices lower
Tue, 8 Jul Closing

The railway budget failed to live up to the market expectations and dragged down the Indian equity markets. Profit booking was seen across index heavyweights since the start of the trading session today. Selling activity intensified during the final hour of trade with the markets closing the day deep in the red. The BSE-Sensex ended lower by 518 points while the NSE-Nifty closed lower by 164 points. Small and mid cap indices too witnessed selling pressures. The BSE Mid Cap and BSE Small Cap indices closed down by 3.63% and 4.19 % respectively. Subsequently, all the sectoral indices were out of favour with realty and power sector stocks being among the top underperformers.

As regards to global markets, Asian indices closed on a mixed note, while European indices opened weak. The rupee was trading at Rs 59.85 to the dollar at the time of writing.

The rail budget was tabled in the parliament today. Expectations were high on big bang modernization and reform schemes. While the budget did not completely disappoint on that front, it was not out rightly impressive either. Here are the key highlights. The focus of the budget was on increasing amenities, cleanliness and comfort for passengers. Investments were also given due attention as the railway minister touched upon issues pertaining to golden quadrilateral and PPP projects. Announcements pertaining to bullet trains was also made. There was also a proposal to restructure the railway board and mention of FDI in railway projects. The latter could be a game changer as the Indian Railway is starving of finance. In short, the budget focused on upgradation and modernization and had no sops for the aam aadmi. While this was a departure from what the previous budgets have been it would be interesting to see how the new government would be able to turnaround the fortunes of railways with its newly laid out policies.

Majority of the Indian pharma stocks ended the day on a weak note with Wockhardt Ltd and Orchid Chemicals being the leading losers. Glenmark pharmaceuticals announced that it received approval from the USFDA for telmisartan tablets. The said drug is generic version of Boehringer Ingelheim's Micardis. Telmisartan is indicated for the treatment of hypertension. The company has received approval for three strengths viz; 20 mg,40 mg and 80 mg tablets. The market size of the said drug is US$ 250m. Other than Glenmark, the only other company that holds the approval is Watson. Thus, there is a likelihood of Glenmark launching the drug under low competition. Among the two patents listed in orange book, one is already expired in Jan 2014, while the another one will expire in 2020. Thus timing of Glenmark's launch remains uncertain for now. The stock of Glenmark closed lower by 3% today.

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