Sensex Ends 207 Points Higher; Healthcare Stocks Witness Buying

Tue, 14 Aug Closing

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Indian share markets continued to trade in the green during the closing hours of the trading session and ended the day on a positive note. Gains were largely seen in the healthcare sector, realty sector and energy sector.

At the closing bell, the BSE Sensex stood higher by 207 points (up 0.6%) and the NSE Nifty closed higher by 79 points (up 0.7%). The BSE Mid Cap index ended the day up by 0.9%, while the BSE Small Cap index ended the day up by 0.5%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood lower by 0.66% and the Nikkei was trading up by 2.23%. The Shanghai Composite stood lower by 0.17%.

European markets were trading on a positive note. The FTSE 100 was up by 0.04%. The DAX was up by 0.25% while the CAC 40 was up by 0.28%

The rupee was trading at 69.85 to the US$ at the time of writing.

In the news from global financial markets, data showed that China's investment in the first seven months of the year slowed to a record low and retail sales softened.

As per the data, fixed-asset investment growth for China slowed to 5.5% during January-July. The data raised concerns about weakening domestic demand and faltering business confidence amid an ongoing US trade war.

Retail sales also stood below expectations and rose 8.8% in July from a year earlier. This was below an expected 9.1% increase and also 9% growth seen in June.

Industrial output rose 6% in July and was below expectations of a 6.3% increase.

All this comes at a time when the US is imposing retaliatory tariffs on China. Note that the Trump administration last week announced that it would impose 25% tariffs on imports of 279 items from China amounting to US$ 16 billion.

The US Trade Representative said that the move is a part of the US' response to China's unfair trade practices related to the forced transfer of American technology and intellectual property.

This is the second tranche of such tariffs and is set to come into effect on August 23.

US had already imposed tariffs on US$ 34 billion worth of goods on July 6 but held off on a final US$ 16 billion in goods as a result of concerns from US companies.

How the growth in China and this trade war pans out remains to be seen. Meanwhile, we will keep you updated from all the developments from this space.

From the pharmaceutical sector, Sun Pharmaceutical Industries share price witnessed buying interest today as the company reported a better-than-expected net profit for the quarter ended June 2018.

The company reported a consolidated net profit of Rs 9.8 billion in the first quarter ended June on the back of strong India and US sales. This compares with a Rs 4.2 billion net loss the company had reported in the same quarter last year.

Revenues during the quarter rose 16.7% year-on-year (YoY) to Rs 74.2 billion from Rs 63.6 billion in the year-ago period.

Owing to the above announcement, Sun Pharmaceutical Industries share price witnessed buying interest and ended the day up by 6.9% on the BSE.

To know more about the company, you can access Sun Pharmaceutical Industries' stock analysis on our website.

Also, speaking of the pharma sector, note that the BSE Healthcare Index has been on a roller coaster ride in the past few years. The period from 2012 to 2015 saw the index go up more than three times.

And since then it has been a painful ride downwards, as can be seen from the chart below:

The Roller Coaster Ride of the BSE Healthcare Index

As we wrote in one of our editions of The 5 Minute WrapUp...

• Pre-2015, pharma companies enjoyed a fairytale ride in the US market. Low labor costs, good chemistry skills, along with efficiency, ensured Indian companies could copy innovator drugs to make generic drugs at a fast pace.
  
  The generic business had lucrative margins for all major pharma players. But the party did not last long. In the quest to supply drugs quickly, they compromised on quality at their manufacturing facilities.
  
  No wonder, the US regulatory authority (USFDA) took strict action. Sun Pharma received a warning letter for its Halol manufacturing facility in 2015. It was like a bolt out of the blue. Since then, the downward spiral began and has continued till date.

We believe that pharma companies that invest in creating a pipeline of complex generics or building competencies in alternative dosage forms are better equipped to tackle the changing dynamics in the US generics market as well as in the overall industry.

Therefore, despite a lot of pessimism surrounding pharma stocks on regulatory uncertainty, we have stocks in open positions in StockSelect and have remained bullish on pharma stocks in our long term service, ValuePro.

In the news from macroeconomic space... As per a leading financial daily, a senior finance ministry official said any intervention from the Reserve Bank of India (RBI) may not do much to stabilise the rupee as the fall in the currency is due to global factors.

As per the news, the RBI has spent about US$ 23 billion in the currency markets so far to arrest the fall in the rupee.

The above comments come as the Indian rupee today breached the 70-mark and hit a new low of 70.08 for the first time against the US dollar.

The domestic currency had recorded its biggest intra-day fall in five years yesterday amid a global currency crisis and concerns over the risk of contagion from Turkey's financial-market turmoil.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Now you can also listen to our Indian Stock Market Wrapup. Just visit SoundCloud, iTunes or Stitcher and access our free weekly podcast. Happy listening!

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