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Sensex Snaps 360 Points; Power Stocks Drag
Tue, 29 Aug Closing

Indian share markets finished in deep red today, breaking a four day positive streak. At the closing bell, the BSE Sensex closed lower by 363 points and the NSE Nifty finished lower by 117 points. The S&P BSE Mid Cap finished down by 0.9% while & S&P BSE Small Cap too finished lower by 1.1%.

Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite was flat and the Hang Seng fell 0.4%. The Nikkei 225 finished lower by 0.5%. Meanwhile, European markets are lower today as French and German shares fall. The French CAC 40 is off 1.3% while the German DAX is down 1.7%.

The rupee was trading at Rs 64.02 against the US$ in the afternoon session. Oil prices were trading at US$ 46.48 at the time of writing.

NTPC Ltd share price fell 3.4% after the government said it will sell a 5% stake in top power producer NTPC Ltd through a stock market auction, with a greenshoe option to sell another 5% in a deal that could raise up to US$2.2 billion.

Domestic rating agency Care Ratings, in its latest report has projected acceleration in the Gross Domestic Product (GDP) growth to 6.5% in the first quarter (April-June) of fiscal year 2017-18 over the last year, up from the 6.1% in the preceding quarter. It said that this growth is contingent on realisation of gross value added (GVA) growth of 6.3%.

The rating agency in its report has stated that agriculture is expected to grow at 3.5-4% during the reporting quarter, largely due to residual output of the Rabi or the winter crop harvest. It said that the value addition in manufacturing will come between 4.5% and 5%, and added that the index of industrial production is at a positive 1.25% for the same period. It also said electricity growth will be 7%, while mining will be up to 3%. Growth of trade, hotels and transport will be around 7% with prospective GST impacting services to a limited extent.

As per the report, the fastest growing segment will be public administration and defence which is expected to grow 12%, on the back of front-loading of spending by the government wherein 80% of the budgeted fiscal space has already been exhausted.

Moving on to news from stocks in the pharma sector. Sun Pharma share price was in focus today after the pharma major's Halol unit received clearance from the UK's pharma regulatory body according to media reports.

The company has got clearance for good manufacturing practices as directed by the UK's Medicines and Healthcare Products Regulatory Agency, said the report. However, Sun Pharma has not commented on the report.

The company's Halol manufacturing unit has faced regulatory issues from the U.S. Food and Drug Administration (USFDA). In December 2016, USFDA had issued a warning letter to the plant for failing to prevent microbiological contamination.

The Indian pharmaceutical industry as a whole has come under a lot of regulatory pressure in the past few years.

We had written about the current predicament of Indian pharma companies in one of the premium editions of the 5 Minute WrapUp:

  • Over the past few years, risk in the US markets has increased. The US Food and Drug Administration has become stricter on products entering US borders. Surprise inspections have increased and companies are being issued warning letters. This has impacted the business and earnings of Indian pharma players, causing major volatility for the sector.

The list of pharma sector woes is long. So, is there light at the end of the tunnel? Girish Shetty, our research analyst thinks there is.

As per him, it doesn't make sense to paint all pharma stocks with the same brush. The leaders of the industry will certainly survive this phase. There are interesting, niche pharma stocks that are worth your attention.

Facing pricing pressures in the domestic and export markets, currency fluctuations, as well as manufacturing issues related to their plant, there is a transformation happening in the overall sector as to how business is done and will be done in the future.

Sun Pharma share price closed the day down by 3%.

And here's a note from Profit Hunter:

The S&P BSE Sensex is witnessing selling pressure today - down 362 points - and most of stocks in the market are trading in the red. But Bharat Forge is currently trading at a very interesting point.

The stock had a stellar run after it bottomed out at Rs 185 in August 2013. It rallied 635% before it topped out at Rs 1,363 in April 2015. It then corrected 50% to hit a low of Rs 682 in June 2016. Thereafter, the stock traded in an uptrend tracking the rising trendline to hit a high of Rs 1,221 in June 2017. It found support from the rising trendline several times in the past.

Today, the stock is down 3% and is trading near the rising trendline.

So will the stock find support from this trendline yet again or will it break the trendline to open up lower levels for the stock?

Bharat Forge Down 3% for the Day
Bharat Forge Down 3% for the Day 

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Mar 16, 2018 (Close)