Sensex Ends 141 Points Lower; Healthcare and Oil & Gas Stocks Witness Selling

Mon, 7 Oct Closing | Monish Vora, TM Team

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Indian share markets witnessed selling pressure during closing hours and ended lower. Sectoral indices ended on a mixed note with stocks in the healthcare sector and oil & gas sector witnessing most of the selling pressure, while consumer durable stocks and banking stocks witnessed buying interest.

At the closing bell, the BSE Sensex stood lower by 141 points (down 0.4%) and the NSE Nifty closed down by 48 points (down 0.4%).

The BSE Mid Cap index ended the day down 0.2%, while the BSE Small Cap index ended the day down by 0.8%.

The rupee was trading at 71.07 against the US$.

Speaking of the volatility witnessed in Indian share markets, if you look at the stock market returns over the years, you will see that the markets have never moved in a linear fashion.

What do I mean by that?

It has never been a one-way street - only up or down.

Stock markets have always moved in cycles.

The Time to Buy Stocks is Now

Here's what Radhika Pandit wrote about this in a recent edition of The 5 Minute WrapUp...

• If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.
  
  Sarvajeet and I believe we are seeing a similar situation currently.
  
  The economic slowdown does not herald the end of the world or for that matter the end of India. It's a phase and like all phases - This too shall pass.

So, the real question is - Are you taking advantage of these price declines to buy quality stocks?

In news from the pharma sector, Glenmark Pharma share price witnessed selling pressure today after the drug firm said it has received a warning letter from the US health regulator for its Baddi facility in Himachal Pradesh.

In a filing to BSE, the company said, "the United States Food and Drug Administration (USFDA) had inspected the company's Baddi facility between April 15 and April 20 and earlier classified the inspection as an 'Official Action Indicated (OAI)'. With regards to the same inspection, the USFDA has now issued a 'warning letter' to the Baddi facility."

Shares of the company slipped over 12% today to hit over seven-year lows on back of the above news. The stock was trading at its lowest level since March 15, 2012.

Watch Now: 3 Little-known Stocks We are Super Bullish On

The company, however, said that the existing manufacturing and the sale of products from this facility will not be impacted. The Baddi facility is expected to contribute US$ 30 million in total sales for this financial year which is about 7% of the total US sales, it added.

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

In other news, shares of Aurobindo Pharma also witnessed selling pressure today after the US drug regulator's observation. After inspecting Aurobindo's Unit-7 between September 19-27, 2019, the USFDA issued a note indicating procedural lapses along with lack of quality control.

The observations include failure to review any unexplained discrepancy, control procedures not established, equipment and utensils not cleaned at appropriate levels, procedures applicable to quality control not thoroughly followed.

Shares of the company crashed over 20% today on back of the above news.

Moving on to news from the automobile sector, Ashok Leyland share price was in focus today. The company said it will suspend manufacturing operations at its various plants for up to 15 days.

The commercial vehicle major on Friday said it will suspend manufacturing at its various plants for up to 15 days this month in order to adjust production to market demand.

Meanwhile, Bosch has announced that the company will observe no production days ranging up to 10 days per month per plant belonging to its powertrain solutions division during Q3FY20.

Reports state that the above decision was taken in order to align production with sales requirements.

Earlier, in a filing on 14 August, the company had announced a similar shutdown per month per plant belonging to the powertrain solutions division during Q2FY20 citing the same reason.

The Bangalore-based company began suspending operations in a series from July when it had first shut down its plant in Tamil Nadu for five days and its unit in Karnataka for two days, followed by single-day shutdowns at Jaipur and Bidadi units.

Note that multiple factors have affected the auto sector of late. The liquidity crisis faced by NBFCs, regulatory changes leading to increased costs, new emission norms...they have all taken their toll.

On 20 September, the government had reduced corporate tax rates from 30% to 22% to boost consumer demand and increase spending by private companies. The effective tax to be paid by the companies, including surcharge and cess, will be 25.17%.

However, in the euphoria of the government's tax rate cuts, an important announcement went unnoticed.

The road transport and highways ministry has proposed a huge increase in re-registration of vehicles which are more than 15 years old.

The proposed hike will be implemented from July 2020. The policy change is aimed at reducing pollution by scrapping older vehicles on the road.

As per Co-head of Research, Tanushree Banerjee, this might come as a welcome relief for automakers who have seen severe fall in sales over the past 1 year.

Here's what she wrote about it in a recent edition of The 5 Minute WrapUp...

• The upcoming festive season and the recent policy measures might just be the trigger needed to revive the sector.
  
  A leading auto player makes it to my list of 7 stocks to buy.
  
  I believe, rising disposable incomes and aspirations of India's youth, will be the key trends benefiting this market leader in the long run.

As per Tanushree, these are just some of the trends that will play a big part in the Sensex 1,00,000 journey.

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

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

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