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Of Pharma Drug Approvals, Global Updates, Oil Prices, and Top Stocks in Action Today
Thu, 17 Aug Pre-Open

Indian share markets snapped their losing streak seen during last week and closed their Wednesday session on a positive note.

At the closing bell, the BSE Sensex closed higher by 322 points and the NSE Nifty finished up 107 points. The S&P BSE Mid Cap finished up by 1.3% while & S&P BSE Small Cap too finished up by 1.3%.

Most of these gains were driven by strong buying momentum in FMCG stocks, metal stocks, and auto stocks.

Top Stocks in Focus

Tata Global Beverages share price will be in focus today as the company yesterday announced its premium natural mineral water brand 'Himalayan' is set to enter the US markets in a phased manner. As per the news, the company is said to enter US markets through an agreement signed by its subsidiary with Talking Rain Beverage Company. To know more about the benefits that the company may accrue through this deal, you can read our latest market commentary note.

Market participants will also be tracking Tata Global share price today. The stock was the most active stock in the stock markets yesterday. Here's a note from the Profit Hunter team on the stock:

  • The stock had formed a base this past one year in a head and shoulder pattern. The stock broke out of the pattern last month with strong volumes. It corrected a bit towards the neckline of the head and shoulder pattern when the company announced its Q4FY17 results on 11 August.

    The stock traded very intensely after the result announcement. It rallied 24% in just three trading sessions to trade at a new life high after five years. The volumes during this up move were also strong indicating buying interest.

    So will the stock maintain its momentum taking cues from the quarterly results? Let's wait and watch.

Drug Approval Developments in the Pharma Space...

Biocon Ltd withdrew its application seeking European Union approval for two drugs yesterday. The company did so after the EU drugs regulator sought re-inspection of their production facility.

Biocon share price witnessed selling pressure on the back of above development and fell more than 8% after the announcement.

In other development, Cadila Healthcare received the US Food and Drug Administration's (USFDA) final approval to market Tiadylt ER capsules and Azelastine Hydrochloride Nasal Spray.

Speaking of USFDA approvals, there's a sharp pick-up in new drug approvals in 2017. 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.

Approvals for drugs have also picked up after USFDA concerns at some of the manufacturing units were addressed. Companies such as Divi's Laboratories, Cadila Healthcare, Sun Pharmaceuticals and Dr Reddy's Laboratories got regulatory clearances for some of their plants during the year.

However, FDA's move to speed up generic drug approvals in a bid to reduce healthcare costs is likely to provide some earnings relief to domestic pharma companies.

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Euro-Area GDP Data

Euro zone gross domestic product (GDP) expanded by 0.6% in the second quarter compared to the first quarter. On an annual basis, the economic growth stood at 2.2% YoY.

Economic growth was strongest in the Netherlands and Latvia, with the Spanish economy also growing above average.

One shall note that inflation in the eurozone is slowly rebounding. And, with this, the ECB is preparing to dial back its ultra-low rates and massive bond purchases. But make no mistake - it will be a challenge for the bank's years of easy money policies.

In June, President Mario Draghi said the ECB governing council is not convinced that the recent rebound in inflation is durable because wage growth remains sluggish.

The ECB has been pouring money into the eurozone to boost inflation from a near-deflationary level.

Most of the economic problems we see today have been fueled by the easy money policies that central banks have adopted around the world. However, with the changes of late at central banks, it seems that the end of easy money is near.

Fed Minutes

Apart from the above data, stock market participants will also take cues from the Fed minutes of the July policy meeting. The Fed, in its meeting held last month, raised its benchmark interest rate unchanged.

US Federal Reserve rate hikes generally have a negative impact on emerging economies. But India is currently seen as better equipped than other emerging markets to ride the impact of higher US interest rates. That's largely because of its stronger economic growth and impressive foreign exchange reserves of more than US$300 billion.

Foreign portfolio investors may not drain funds from India in a knee-jerk reaction to the Fed rate hike, as that would mean missing out on the enormous growth opportunities Indian markets offer.

Oil Prices Rise on Falling US Inventories

Crude oil prices rose on Wednesday after data showed a decline in US crude inventories. As per the data, US crude inventories fell by 9.2 million barrels in the week to August 11.

To keep a tab on the movements in crude oil and other commodities, you can read the stock market commentary from the Daily Profit Hunter team. Their commentary tracks the developments in the global economy as well as stock, currency, and commodity markets.

On the domestic front, falling oil prices bode well for the Indian economy. This we say is because India is hugely dependent on petroleum imports.

India is the world's third-largest oil consumer. And energy consumption in India is set to grow as our economy remains one of the few 'bright spots' in a slowing, aging world economy. And India could face a potent risk with a rise in crude oil prices.

The only way out for India is to reduce its dependence on oil imports and achieve fuel-sufficiency.

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Mar 16, 2018 (Close)