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Sensex Closes Weak; Metal & Banking Stocks Fall
Thu, 3 Aug Closing

Share markets in India extended their losses to finish the day deep in red. At the closing bell, the BSE Sensex closed lower by 239 points while the NSE Nifty finished lower by 68 points. Meanwhile, the S&P BSE Midcap Index and the S&P BSE Small Cap Index ended down by 0.5% & 1% respectively.

Barring energy stocks & consumer durables stocks, all sectoral indices finished the day in red with metal sector and bank sector witnessing maximum selling pressure.

Overseas, Asian equity markets finished lower today with shares in China leading the region. The Shanghai Composite is down 0.37% while Hong Kong's Hang Seng is off 0.28% and Japan's Nikkei 225 is lower by 0.25%. European markets are mixed. The FTSE 100 is higher by 0.02%, while the CAC 40 is leading the DAX lower. They are down 0.30% and 0.16% respectively.

The rupee was trading at Rs 64.63 against the US$ in the afternoon session. Oil prices were trading at US$ 49.76 at the time of writing.

Coal India share price tanked 3.4% on the reports that the company produced 155.4 million tonnes (mt) of coal in April-July of 2017- 18, missing the target by 12.6 mt. The production goal for April-July was 168 mt, as per the reports.

Indian Oil Corporation share price surged 4.6% after it reported a fall of 45% in its net profit at Rs 45.5 billion for the quarter under review as compared to Rs 82.7 billion for the same quarter in the previous year. Analysts on average had expected a net profit of Rs 30.6 billion for the first quarter.

Pharma stocks closed the day on a mixed note with Strides Shasun and Lupin leading the losses. Lupin share price fell over 3.8% after it reported 59.4% decline in consolidated net profit to Rs 3.6 billion for the quarter ended on 30 June 2017, due to price erosion of some products, lower US sales and disruption due to GST implementation in the country. The company had posted a net profit of Rs 8.8 billion for the corresponding period of the previous fiscal.

The company's sales in North America for the first quarter of FY2018 were at Rs 16 billion as against Rs 21.9 billion during corresponding period of the previous fiscal, accounting for 42% of global sales.

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Further, the company's India formulation sales stood at Rs 9.3 billion during Q1 FY2018 accounting for 25% of Lupin's global sales.

On a separate note, Lupin has received final approval for its Rosuvastatin Calcium Tablets 5 mg, 10 mg, 20 mg and 40 mg from the United States Food and Drug Administration (USFDA). Crestor tablets had US sales of US$ 3.4 billion as per IMS MAT March 2017. The tablets are the AB rated generic equivalent of iPR Pharmaceuticals, Inc's Crestor tablets.

In recent times, pharma companies were bogged down by mounting pressure from US Food and Drug Administration (USFDA) to adhere to quality standards at their manufacturing plants.

In the past three years, the USFDA raised numerous regulatory concerns resulting in import bans and suspension of new drug approvals from facilities of Indian pharma companies. But what has come as a breather is a sharp pick-up in new drug approvals in 2017.

USFDA sweetener for Indian Pharma

During the period January-July 2017, 129 approvals for generic drugs were made. This is 45% higher from 89 approvals made in the corresponding period last year.

However, as per our research analyst Taha Merchant, the uncertainties make it important to be stock specific in the sector. It is important to look for companies that have the competence and staying power.

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Moving on to the news from the economy. Following similar trend to the contraction in manufacturing sector, activity in India's service sector too contracted in the month of July to its lowest level since September 2013, on the back of the implementation of the goods and services tax (GST).

The seasonally adjusted Nikkei Services Business Activity Index fell to 45.9 in July from 53.1 in June. The Nikkei India Composite PMI Output Index which measures both manufacturing and services also plunged to 46.0 in July from 52.7 in June.

The report also signaled the first downturn in output and new work since January which had an adverse effect on the labour market, with employment contracting over the month. Similarly, factory orders decreased in July and at the quickest pace since February 2009.

On the price front, services charges rose at the sharpest rate in almost four and a half years during July, while manufacturers offered discounts in order to stimulate demand.

However, Indian service providers exhibited optimism towards the 12-month outlook for activity, with hopes of a better understanding around the new tax regime boosting confidence.

And here's a note from Profit Hunter:

While the stock markets are trading near their new life highs, Coal India is hitting new 52-week lows. The stock is the top loser in the Nifty 50 index today - down 3.5%.

The stock got listed in November 2010 and since then it has been traded in a broad range of 240-480. The stock corrected from the upper end of the range in August 2015 to a low of Rs 272 in April 2016. It then bounced to Rs 350, but the down move continued and the stock broke below the 270 level to hit a 52-week low.

It corrected further but bounced strongly after finding support near the bottom end of the broad range near 240 level in June (the level acted as support in August 2013 and February 2014 as well). But the bear continued to dominate. And today, the stock hit a new 52-week low to trade near the 240 level.

So it will be interesting to see if the stock can find support at the 240 level yet again or if it will slip down to break the broad range...

Coal India at a New 52-Week Low
Coal India at a New 52-Week Low 

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