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Sensex Ends 284 Points Up; FMCG & Metal Stocks Top Gainers
Fri, 17 Aug Closing | Rini Mehta, TM Team

Indian share markets settled higher today taking cues from their Asian peers. At the closing bell, BSE Sensex ended up by 284 points, while, NSE Nifty ended up by 86 points.

Except energy stocks, all sectoral indices ended the day in green with metal stocks and FMCG stocks leading the gainers.

Globally, Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.4% and the Nikkei 225 rose 0.4%. The Shanghai Composite lost 1.3%. European markets are mixed today. The CAC 40 is up 0.2% while the FTSE 100 gains 0.1%. The DAX is off 0.1%.

The rupee was trading at Rs 70.23 against the US$ in the afternoon session.

In the news from the pharma sector. As per an article in a leading financial daily, drug price regulator, the National Pharmaceutical Pricing Authority (NPPA) has fixed the ceiling price of 92 drug formulations used for treatment of cancer, hepatitis C, migraine and diabetes among others.

The prices have been fixed under the Drug (Prices Control) Order (DPCO), 2013.

The authority has mentioned that out of total, the retail price of 72 scheduled formulations has been fixed, that of 9 has been revised. It has also revised the retail prices of 11 scheduled formulations.

Under the Drugs (Prices Control) Order (DPCO) 2013, it fixes ceiling price of essential medicines of Schedule I based on simple average of all medicines in a particular therapeutic segment with sales of more than 1%.

In respect of medicines not under price control, manufacturers are allowed to increase the maximum retail price by 10% annually.

Set up in 1997, NPPA has been entrusted with the task of fixation/revision of prices of pharma products, enforcement of provisions of DPCO and monitoring of prices of controlled and decontrolled drugs.

Speaking of Indian pharma sector, the leading therapy segments in terms of brand launches during FY13 to FY17 were dermatology, anti-infectives, cardiology, and gastroenterology. Anti-diabetics have also been growing in double-digits for the past five years.

However, with the government bringing a number of essential drugs under price control, prescription drugs are witnessing sluggish growth. Therefore, pharma companies are now focusing on the over-the-counter (OTC) medicines.

Thus, while pricing controls keep the operating environment tough in the domestic market, pharma companies with strong brands in the OTC category are better placed to ride the slowdown.

In another development, the India Ratings and Research (Ind-Ra), a subsidiary of Fitch Ratings, in its latest report has revised its Indian economic growth forecast to 7.2% for current fiscal year (FY19) from 7.4% forecasted earlier.

This revision came on the back of headwinds emanating from elevated global crude oil prices and the government's decision to fix the minimum support prices of all kharif crops at 1.5 times the production cost.

It also pointed to other headwinds lurking on the horizon such as the rising trade protectionism, depreciating rupee and, no visible signs of the abatement of the non-performing assets of the banking sector.

The report stated that it is taking a tad longer than expected to resolve cases under the Insolvency and Bankruptcy Code.

The report also expects private final consumption expenditure to grow 7.6% in 2018-19 compared to 6.6% in 2017-18. It pointed out that government capex alone will be insufficient to revive the capex cycle, as its share in the total capex of the economy was only 11.1% during 2012-17.

The rating agency observed that the share of private corporations was 40.9%. As private corporations in combination with the household sector command 77.5% of the total investment in the economy, their capex revival is a must for a broad-based recovery in the investment cycle.

Noting that India will face continued headwinds on the exports front, it said although it expects the annual value of exports to touch US$345 billion in the current fiscal, crossing the peak of US$318 billion attained in 2013-14.

On the inflation front, it expects average retail and wholesale inflation in 2018-19 to come in at 4.6% and 4.1%, respectively, as against 4.3% and 3.4% forecasted earlier. It also expects current account deficit (CAD) to widen to US$71.1 billion in 2018-19 from US$48.7 billion in 2017-18.

On rupee, it said that in 2018, rupee has already depreciated 7.7% till July in response to elevated global turbulence, worsening of current account, rising inflation and concerns related to fiscal deficit.

Besides, Ind-Ra has maintained a stable outlook on the finances of Indian states for 2018-19 and expects the aggregate fiscal deficit of the states to moderate to 2.8% of GDP.

Meanwhile, note that, by clocking 7.7% growth in the March quarter, India has regained the title of 'world's fastest-growing major economy'.

India's GDP Growth is Back on Track

We at Equitymaster, were in wait and watch mode. But now, we believe, the revival in the economy is truly underway. A good monsoon will only add to the momentum.

However, we must point out, the revival is not complete. It has been driven by government spending and private sector consumption. Capital investments and exports are yet to pick up. Only when these engines start firing will we achieve 9%+ growth.

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

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