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Indian Indices Gain Momentum; Healthcare Sector Up 1.8%
Wed, 4 Oct 11:30 am | Monish Vora, TM Team

After trading on a volatile note during the start of the day, stock markets in India witnessed buying interest and went on to trade on a positive note. Sectoral indices are trading on a positive note with stocks in the healthcare sector and FMCG sector witnessing maximum buying interest.

The BSE Sensex is trading up 170 points (up 0.5%) and the NSE Nifty is trading up 53 points (up 0.5%). The BSE Mid Cap index is trading up by 0.6%, while the BSE Small Cap index is trading up by 0.8%. The rupee is trading at 65.33 to the US$.

The Reserve Bank of India's (RBI) two-day policy meeting is set to conclude today, with a decision on key interest rates in the offing.

The fourth bi-monthly monetary policy statement for 2017-18, to be released today, is being keenly awaited by all stakeholders - especially the industry which has been demanding lower interest rates.

Various bankers, including the State Bank of India (SBI), however, are of the view that the RBI would maintain status quo this time as inflation has risen.

Note that the RBI in its last policy review in August reduced the repo rate by 0.25% to 6%, citing reduction in inflation risks. The rate cut was the first in 10 months and brought the policy rates to a near 7-year low.

In the news from the IPO space, Godrej Agrovet Ltd is set to open its initial public offer (IPO) today. The agri-business unit of Godrej Industries Ltd is aiming to raise around Rs 11.5 billion through the share sale.

The IPO comprises a fresh issue of shares aggregating up to Rs 2.9 billion by the company, an offer for sale by promoter Godrej Industries Ltd. aggregating up to Rs 3 billion, and up to 12.3 million equity shares by investor V-Sciences Investments Pte. Ltd of Temasek Holding that would total up to Rs 5.7 billion.

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The issue will open on 4th October. The price band has been fixed between Rs 450 and Rs 460 per equity share of face value of Rs 10 each.

Meanwhile, MAS Financial Services on Thursday said it has fixed a price band of Rs456-459 per share for its initial share sale offering, through which it is estimated to raise Rs 4.6 billion. The IPO will be open to public subscription from the 6th to 10th October.

We'll soon review the above IPOs and release their recommendation notes. You can check the same on our IPO page.

Also, if you want to know more about IPOs and whether they are right for you, you can download the free special report - How to Get Rich with IPOs.

In the news from pharma sector, Natco Pharma is witnessing buying interest today. Gains are seen as the company's marketing partner Mylan received US drug regulator's approval for generic version of Copaxone in strengths of 40 mg/mL and 20 mg/mL.

The company said that the launching plan for the above products will be communicated after concurring with its partner Mylan.

The drugs are indicated for the treatment of patients with relapsing forms of multiple sclerosis (MS), a chronic inflammatory disease of the central nervous system.

The sales for the 20 mg/mL dose was approximately US$ 700 million and for the 40 mg/mL dose was approximately US$ 3.6 billion for the 12 months ending July 31, 2017, Quintiles IMS stated.

Owing to the above development, Natco Pharma share price surged around 20% today.

One shall note that USFDA alerts on Indian pharma companies have increased over the past few years. Regulators used to visit the plants every two years. Now they come every eight months. Increasing inspections have led to a total of 41 import alerts in the past eight years - 33 of them (80%) in just the last four years (2013-16). This clearly signifies increased USFDA scrutiny on Indian pharma firms. If that wasn't enough, increasing pricing pressure in the generics segment has dented realisations.

However, the recent development of USFDA expediting the drug approval process can bring some respite for Indian pharma companies. This comes as drug approvals for Indian companies have gone up 50% in the period from January to June 2017 compared to the same period last year, as can be seen from the chart below:

Expediting Drug Approval Process to be a Positive for Industry

While short-term pain is expected, companies with strong R&D capabilities and compliant plants will do well over the long term. The uncertainties make it important to be stock specific in the sector. It is important to look for companies that have the competence and staying power to overcome the challenges.

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

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Mar 20, 2018 (Close)