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Sensex Continues Downtrend; Realty Sector Down 2%
Mon, 4 Sep 01:30 pm

After opening the day in red, share markets in India continued the downtrend and are currently trading weak amid fresh missile launch threats from North Korea. Sectoral indices are trading on a negative note with stocks in the realty sector and stocks in the IT sector leading the losses.

The BSE Sensex is trading down by 235 points (down 0.7%), and the NSE Nifty is trading down by 82 points (down 0.8%). Meanwhile, the BSE Mid Cap index is trading down by 1%, while the BSE Small Cap index is trading down by 0.9%. The rupee is trading at 64.10 to the US$.

In news from the manufacturing sector, the Indian manufacturing activity contracted for the first time this calendar year in July following the launch of the Goods and Services Tax (GST).

According to the Nikkei Purchasing Managers' Index (PMI) survey by Markit, India's manufacturing sector rebounded smartly in August after contracting in July. Introduction of the GST weighed heavily on the Indian manufacturing industry in July.

The PMI is the reading of the country's manufacturing sector output and is updated monthly. A reading above 50 indicates expansion, while any score below the mark denotes contraction.

PMI rose to 51.2 in August, from 47.9 in July putting the sector on the growth track after witnessing contraction in July. Notably, the PMI reading in July was its lowest point since February 2009, indicating the first deterioration in manufacturing and business conditions in 2017.

Manufacturing Activity Rebounds in August

Manufacturing sector expansion came a day after government data showed manufacturing growth in the first quarter of the current financial year fell to 1.2% from 10.7% a year ago, bogged down by the lingering effects of demonetisation and GST rollout and making India's GDP growth slump unexpectedly to a three-year low of 5.7%.

The survey noted that the GST launch affected demand and the reductions in output, new orders and purchasing activity were all the steepest since early 2009.

Though Indian manufacturers remained cheerful about growth prospects, worries about the possibility of unexpected policy decisions weighed on confidence. Going forward, manufacturing activity is set to grow as manufacturers begin production for the festive season.

Moving on to news from the pharma sector. Ajanta Pharma is in focus today after the company announced that it has received final ANDA (abbreviated new drug application) approval from the US Food and Drug Administration (USFDA) for Entacapone Tablets. This new approval is part of a portfolio of products that the company has developed for the US market.

The tablets are a bioequivalent generic version of Comtan 1 Tablets and are used for the treatment of Parkinson's disease.

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In total, Ajanta Pharma has 35 ANDAs of which it has final approvals for 20 ANDAs; tentative approvals for 2 ANDAs; and 13 ANDAs are under review with USFDA.

At the time of writing, Ajanta Pharma share price was trading down by 0.2%.

The Indian pharmaceutical industry 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.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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Please Note: The stock price of Yes Bank on NSE-50 is not adjusted for face value split. Kindly refer to its BSE's quote today for the adjusted price.

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Sep 22, 2017 (Close)

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