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Strong Start to the Week; DLF Stock Surges 17%
Mon, 14 Aug Closing

Indian share markets snapped their 5-day losing streak and finished the trading day on a strong note amid firm global markets.

At the closing bell, the BSE Sensex closed higher by 235 points and the NSE Nifty finished up 83 points. The S&P BSE Mid Cap finished up by 2.5% while & S&P BSE Small Cap too finished up by 2.5%. Gains were largely seen in metal stocks, realty stocks and consumer durables stocks.

Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 1.36% and the Shanghai Composite rose 0.90%. The Nikkei 225 lost 0.98%. European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.09% while France's CAC 40 is up 0.77% and London's FTSE 100 is up 0.57%.

The rupee was trading at Rs 64.02 against the US$ in the afternoon session. Oil prices were trading at US$ 48.62 at the time of writing.

DLF share price soared 17% after the real estate developer reported a consolidated net profit of Rs 1.1 billion for the quarter ended June 2017.

The company had posted profit of Rs 2.61 billion in the same quarter year quarter. Despite growth in the economy, the demand for residential real estate continued to be soft. Implementation of Real Estate Regulatory Act (RERA) and Goods & Service Tax (GST) elongated the sales cycle. The company expects that sector would achieve normalcy over next 2-3 quarters.

The sentiments also remained optimistic as the company struck a deal with Singapore's sovereign wealth fund GIC for a 40% stake in DLF Cyber City Developers. Reportedly, the deal has entered the final stages.

As per the reports, the stake sale, estimated to be valued at US$2 billion (around Rs 130 billion), will be placed before the audit committee for approval soon.

In news from pharma sector, as per a leading financial daily, US-based law firms have threatened a class action suit against the Indian pharma major, Dr. Reddy's Laboratories for non-disclosure of quality-related lapses at its Indian facilities, reported a leading business daily.

Earlier, the German regulatory authority had revoked GMP (good manufacturing practices) clearance in respect of the company's formulations manufacturing Unit 2 plant in Hyderabad.

The stock on a yearly basis has lost 32.49% returns and has underperformed BSE Sensex index and BSE Healthcare index.

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Dr Reddy's share price finished the trading day down by 0.5% on the BSE.

Meanwhile, Cipla share price surged 5% after it posted a 23.63% rise in consolidated net profit to Rs 4.3 billion for the first quarter ended 30 June. The company had posted a net profit of Rs 3.4 billion for the corresponding period of the previous financial year.

Consolidated total income from operations stood at Rs 35.25 billion for the quarter under consideration against Rs 36.5 billion for the same period a year ago.

Since the start of 2017, the BSE Pharma Index has fallen 20%. The combined market capitalisation of the top pharma stocks is now less than that of Reliance Industries.

Combined Market Cap of Top Pharma Lesser than that of Reliance Industries

Over the last three years, the USFDA raised numerous regulatory concerns, resulting in import bans and suspension of new drug approvals from facilities of Indian pharma companies. This has hurt the sector's revenues and earnings and is behind much of the pessimism surrounding the sector.

But amid this pessimism, a smart pick-up in new drug approvals has provided some solace. There has been a 45% YoY jump in approvals for generic drugs in the first seven months of 2017 as the FDA aims to bring down healthcare costs.

But consolidation of suppliers in the US has resulted in greater bargaining power for distributors and pharmacies, which has led to price erosion for generic drug manufacturers.

In news from steel sector, Tata steel share price rallied 4.2% after it was reported that the company signed an agreement on segregating the company's UK business from its pension scheme.

The move is said to potentially free up the company to pursue strategic options for the unit, including a possible merger with Thyssenkrupp AG of Germany.

The company has signed the regulated apportionment arrangement with the pension trustee and the terms are expected to take effect in a month's time.

Steel stocks finished the day on a strong note with Jindal steel share price and JSW Steel share price leading the gains.

State Bank of India (SBI) share price fell 1% to Rs 278. The bank reported a lower-than-expected quarterly net profit to Rs 20.05 billion, down 20% from a year ago after setting aside more money to cover the risk of defaults on ballooning bad loans.

Asset quality concerns continue to plague India's banks, especially those owned by the government, and street analysts expect June quarter's pain to remain in 2017-18.

As per an article in The Livemint, 37 of the 38 listed banks that reported June quarter earnings till Saturday have posted a 24.3% rise in aggregate gross bad loans to Rs 7.79 trillion from a year earlier,

The increase is 6.43% when compared with the March quarter. Of this, Rs 6.83 trillion belong to public sector banks.

And here's a note from Profit Hunter:

After a decent correction last week, the Indian stock markets are again witnessing buying interest. The Nifty 50 Index is up 83 points, and Sun Pharma is among the top gainers - up 5%.

The stock has been trading in a falling channel since it topped out in April 2015. It's witnessed immense selling pressure over the past three weeks to trade at the channel's support line.

On Friday, after market hours, the company announced its Q1FY18 results. And today, the stock opened gap down to hit a new 52-week low, but it recovered immediately to trade 5% up with heavy volumes. The last two days candles formed a bullish engulfing pattern on the daily chart. It seems the stock found a strong support from the channel's support line.

The RSI indicator also formed a bullish divergence, indicating a change in momentum.

We'll have to wait and see if the stock can rally towards the channel's resistance line or if it will again slip to another a 52-week low.

Sun Pharma Reacts to Q1FY18 Results
Sun Pharma Reacts to Q1FY18 Results

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Mar 16, 2018 (Close)