Sensex Trades Marginally Lower; HDFC & ICICI Bank Top Losers

Thu, 5 Sep 12:30 pm

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Share markets in India have erased early gains and are presently trading on a negative note.

The BSE Sensex is trading down by 117 points (down 0.3%), while the NSE Nifty is trading down by 13 points (down 0.1%). The BSE Mid Cap index is trading up by 0.1%, while the BSE Small Cap index is trading up by 0.5%.

Sectoral indices are trading on a mixed note with stocks in the realty sector and finance sector witnessing maximum selling pressure, while metal stocks and oil and gas stocks are trading in green.

The rupee is currently trading at Rs 71.89 against the US$.

In news from the pharma sector, Lupin has entered into a licensing agreement with Germany's Boehringer Ingelheim to develop and commercialise a novel anti-cancer compound in a deal valued at US$ 700 million.

The partnership aims to develop Lupin's lead MEK inhibitor compound in combination with one of Boehringer Ingelheim's innovative KRAS inhibitors for patients with gastrointestinal and lung cancers harboring a broad range of oncogenic KRAS mutations.

Global research firm, Morgan Stanley has also maintained overweight call on the stock with the target of Rs 1,003 per share.

To know more about the company, you can read Lupin's latest result analysis and Lupin's 2018-19 annual report analysis on our website.

Meanwhile, Laurus Labs has received establishment inspection report from US Food and Drug Administration (USFDA).

The company said in a press release that it received the establishment inspection report (EIR) from USFDA for its API units 1 & 3 at Parawada, Visakhapatnam, for the inspection conducted in June.

The company also received global fund expert review panel approval in FDF segment for fixed dose combination TLE 400 (Tenofovir/Lamivudine/Efavirenz 300/300/400mg) for supply in GF-funded projects.

Lupin share price and Laurus Labs share price are presently trading up by 3% and 1.5%, respectively.

Moving on to news from the banking sector, the board of public sector lender Punjab National Bank (PNB) is scheduled to meet today to consider the amalgamation of Oriental Bank of Commerce (OBC) and United Bank of India into PNB.

The board will also consider capital infusion up to Rs 180 billion by Government of India by way of preferential issue of equity share and fixing date of extra ordinary general meeting (EGM) for obtaining shareholders' approval in this regard.

Last week, the government had announced the series of mergers involving 10 state-owned banks, a move which will reduce the number of state-run banks to 12 from 27 in 2017.

Under this arrangement, Oriental Bank of Commerce and United Bank would be merged with Punjab National Bank to create India's second largest lender with a deposit market share of 8%.

The combined entity of PNB, OBC and United Bank will have a size of about Rs 18 lakh crore, with PNB being the anchor bank.

Meanwhile, United Bank has informed stock exchanges that its board will not be deliberating on the amalgamation with PNB on September 6, 2019 and will discuss the matter on a later date.

Note that on Wednesday, global rating agency Moody's upgraded the outlook on PNB to 'positive' from 'stable'. The affirmation of PNB's ratings with a positive outlook reflects Moody's view that the bank's baseline credit assessments will likely improve after the capital infusion from the government, and that its financial metrics will gradually improve, it said.

Moody's however added that it could lower PNB's BCA and ratings or change the rating outlook to stable if its asset quality, profitability and capital deteriorate on a standalone basis or as a result of the merger.

PNB share price is presently trading up by 1.7%.

Speaking of the announced mergers, most investors would be worried about the level of NPAs and current and savings accounts (CASA) of the merged entities.

Lower NPA ratio and sustenance of high CASA, in the future, could signal the banks' fitness levels to lend more.

India's Top 6 Public Sector Banks Are Getting Fitter

Here's what Tanushree Banerjee wrote about the above development in a recent edition of The 5 Minute WrapUp...

• But what could go unnoticed is the efficiency potential of the merged entities.
  
  Post-merger, the employee per branch ratio of the consolidated PSU entities could be in the range of 7 to 9 per branch. This would be almost half that of their private sector counterparts like HDFC Bank and Kotak Bank.
  
  Leaner operations would mean use of technology to support growth.

So, don't be surprised if the PSU entities leverage technology at a much bigger scale than their private sector peers, in a few years.

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

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