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Markets will remain closed on 19th & 20th October 2017.
We wish all our readers a very Happy Diwali!

Sensex Finishes on a Flat Note; Novartis India Rallies 7%
Thu, 21 Sep Closing | Karan Janani, TM Team

Indian share markets continued to trade range bound in afternoon session with market participants awaiting the US Federal Reserve's policy statement this week for fresh hints on the possible pace and timing of further US monetary tightening.

At the closing bell, the BSE Sensex closed lower by 30 points and the NSE Nifty finished down by 19 points. The S&P BSE Mid Cap finished down by 0.3% while S&P BSE Small Cap finished down by 0.5%. Realty stocks and consumer durables stocks witnessed majority of the selling pressure. Meanwhile, gains were seen in pharma stocks and software stocks.

Asian stock markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.18%, while the Shanghai Composite & the Hang Seng fell 0.24% and 0.06% respectively. European markets are mixed today. The DAX is up 0.30% while the FTSE 100 gains 0.09%. The CAC 40 is even.

The rupee was trading at Rs 64.53 against the US$ in the afternoon session. Oil prices were trading at US$ 50.52 at the time of writing.

Reliance Communications share price rose 5.1% after CNBC report said that Telecom Disputes Settlement and Appellate Tribunal directed DoT to complete Rel Comm-SSTL merger in two weeks.

In news from pharma sector, Dr Reddy's share price surged 7.5% as the company received an Establishment Inspection Report (EIR) for its Formulation Srikakulam Plant (SEZ) Unit II, Andhra Pradesh from the US Food and Drug Administration (USFDA).

Recently, USFDA had completed the inspection at Dr. Reddy's API Mirfield Plant, United Kingdom on September 15, 2017. The company had been issued a Form 483 with three observations. The company received zero observations for its custom pharmaceutical services facility, technology development centre, at Miyapur in Hyderabad after audit of the facility by the USFDA.

Cadila Healthcare share price finished the trading day on an encouraging note (up 3.5%) after the company received the final approvals from the US health regulator to market Desoximetasone ointment and Labetalol hydrochloride tablets.

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Meanwhile the company also recently entered into an exclusive agreement with Russian company Pharm Aid Ltd for the technology knowhow on varicella vaccine production in the Russian Federation.

Through this agreement, Zydus gains access to the public and private market segments in the Russian Federation, Belarus, Uzbekistan, Kazakhstan, Armenia and Kyrgyzstan. Reportedly, the demand is estimated at 3 million dosages per annum in the Russian Federation alone.

In another development, Novartis India share price also surged 6.8% after it was reported that the company is planning for buyback of its equity shares.

Share buybacks, led primarily by IT companies, are set to hit a new record this financial year. As per Prime Database, in the first five months of FY18, at least twenty companies have offered to buy back shares worth Rs 480 billion. Last year, 45 companies announced Rs 344.6 billion worth of buybacks. The trend has been gathering momentum since the government imposed an additional dividend distribution tax (DDT) in the Budget 2016-17.

Automobile stocks finished on a negative note today with Force Motors share price and Maharashtra Scooters share price leading the losses.

Despite global lull in the automotive sector, the Indian car sales are likely to remain robust, global credit rating agency, Moody's Investors service in its latest report. The report stated that the sales of Indian car industry will grow at 9% in 2017 and 7% next year, aided by Goods and Services tax (GST) regime coupled with new model launches.

The rating agency further said that the new tax regime had prompted a number of automakers to lower prices of their passenger vehicles, which had encouraged dealer to restocking and led to a subsequent boost in sales. Moody's is also expecting India's auto sales to touch 3.6 million-unit mark in 2017.

The report further noted that in key markets like China, Japan and India, the steady global GDP growth will drive a bigger demand for cars, while US car sales may weaken and may hamper growth of auto sector globally.

Moody's further predicted that China's auto sales will grow 3% this year and 2% in 2018, while Japanese car sales will grow by a robust 5.6% this year and 2% next year. It also said that automotive demand is poised to bounce back in Brazil, Argentina and Russia as their respective economies emerge from recession.

Moving on to news from IPO segment. As per an article in The Economic Times, the Rs 84 billion initial public offer (IPO) by SBI Life on Thursday progressed at snail's pace, as the issue got subscribed 11% on Day 2 of the bidding process so far. The IPO of SBI Life Insurance Co. Ltd was subscribed 9% on the first day of the IPO.

Retail portion was subscribed 21%, while employee quota was subscribed 18%. The quota for qualified institutional investors and non-institutional investors was subscribed 6% and 2%, respectively.

The insurance company, which is looking to maintain 39% growth achieved in FY17, has set the price band for the issue at Rs 685-700 per equity share. The joint venture between SBI and BNP Paribas Cardif, the insurance arm of BNP Paribas, would be offering a discount of Rs 68 per share on the offer price to its eligible employees.

Despite being the second most populated country in the world after China, demand for risk cover products remains low. As per Crisil Research, the non-life penetration in India is among the lowest with premium income forming 0.8% of the GDP in 2016.

Non-Life Insurance Penetration in India is Woefully Low

This is quite low as compared to the global average of 2.8%. In fact, India lags behind China and Brazil, each having non-life insurance penetration of 1.8%. As per Swiss Re, India is the fifteenth largest market in the world and fourth largest market in Asia.

he non-life insurance sector in India is valued at Rs 1.28 trillion and has been growing at a compounded annual growth rate of 17.4% in the last 16 years. Demand drivers such as rapid urbanisation, rising disposable income, increasing risk awareness emergence of new risks such as cyber frauds and regulatory focus on improving insurance coverage are expected to accelerate growth ahead.

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Oct 19, 2017 (Close)

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