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Indian Indices End Volatile Day in Red; Energy Stocks Drag
Mon, 22 Oct Closing | Monish Vora, TM Team

After opening the day in green, share markets in India witnessed volatile trading activity throughout the day and ended the day in red. Sectoral indices ended the day in red, with stocks in the energy sector and stocks in the consumer durables sector losing the most.

At the closing bell, the BSE Sensex stood lower by 181 points (down 0.5%) and the NSE Nifty closed down by 58 points (down 0.7%). The BSE Mid Cap index ended the day down 0.7%, while the BSE Small Cap index ended the day down by 2%.

Asian stock markets finished in green. As of the most recent closing prices, the Hang Seng was up by 2.3% and the Shanghai Composite was up by 4.1%. The Nikkei 225 was up by 0.4%. Meanwhile, European markets too were trading on a positive note. The FTSE 100 was up by 0.7%, The DAX, was up by 0.4% while the CAC 40 was up by 0.1%.

The rupee was trading at Rs 73.44 against the US$ in the afternoon session. Oil prices were trading at US$ 79.9 at the time of writing.

In news from stocks in the pharma sector. Unichem Labs was in focus today as the company received an establishment inspection report (EIR) from the US Food and Drug Administration (USFDA).

The company received the establishment inspection report (EIR) for its for its formulation facility in Pithampur and Rohat indicating a closure of inspection.

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As per USFDA, after the completion of an inspection of a facility, an EIR is issued to a company detailing inspection findings.

The USFDA inspected the Pithampur unit during July 23-27 and Roha from July 30 to August 3, 2018.

Unichem Labs share price ended the day up 3%.

Indian pharma companies catering to international markets, and especially the US markets are breathing a sigh of relief. After being adversely affected by import bans and the suspension of new drug approvals from manufacturing facilities in the past three years, there has been a sharp pick-up in new drug approvals in FY17.

However, 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.

Moving on to news from stocks in the financial services sector. According to a leading financial daily, the government may have to bail out cash-strapped IL&FS group.

This has been necessitated following failed attempts by the company to raise Rs 45 billion through a rights issue. If the government does heed the appeal from IL&FS, this would be its second intervention in the company after having recently superseded the board.

The IL&FS board, chaired by Kotak Mahindra Bank Ltd's managing director, Uday Kotak, is likely to pitch the centre for a government bailout.

Recently, IL&FS and its subsidiaries were downgraded directly from the highest credit rating "AAA" to "Junk". This has led to nervousness about the credit profile of other private issuers, especially NBFCs. Many investors are now rushing to sell debt securities of various housing finance companies which are heavily dependent on debt refinancing.

It must be noted that IL&FS has missed payment on more than five of its obligations since August 2018. It has total debt of US$ 12.6 billion, of which 61% is in the form of loans from banks and other financial systems.

According to Moody's Investor Services, IL&FS's outstanding debentures and commercial paper accounted for 1% and 2%, respectively, of India's domestic corporate debt market as of 31 March 2018. Its bank loans made up about 0.5% to 0.7% of banking system loans.

There are concerns that the defaults by IL&FS could cause a contagion in the Indian financial sector.

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Stock Market Updates

IRB INFRA. Surges by 5%; BSE REALTY Index Up 0.5% (Today's Market)

Nov 21, 2018 12:41 PM

IRB INFRA. share price has surged by 5% and its current market price is Rs 144. The BSE REALTY is up by 0.5%. The top gainers in the BSE REALTY Index is IRB INFRA. (up 5.1%). The top losers are PHOENIX MILL (down 0.8%) and SOBHA LIMITED (down 1.3%).

The BSE IT Index Down 3% ; L&T INFOTECH LTD Among Top Losers (Today's Market)

Nov 21, 2018 12:33 PM

The BSE IT Index Down at 13,867 (down 3.2%). Among the top losers in the BSE IT Index today are L&T INFOTECH LTD, TCS and INFOSYS LTD. Meanwhile, the BSE Sensex has plunged 0.7% to 35,494.

MAX INDIA LTD Plunges by 7%; BSE 500 Index Down 0.4% (Today's Market)

Nov 21, 2018 12:03 PM

MAX INDIA LTD share price has plunged by 7% and its current market price is Rs 68. The BSE 500 is down by 0.4%. The top gainers in the BSE 500 Index are JAIPRAKASH ASSO. (up 6.6%) and SPICEJET LTD (up 6.5%). The top losers are MAX INDIA LTD (down 6.8%) and L&T INFOTECH LTD (down 5.1%).

JAIPRAKASH ASSO. Surges by 7%; BSE REALTY Index Up 0.7% (Today's Market)

Nov 21, 2018 10:59 AM

JAIPRAKASH ASSO. share price has surged by 7% and its current market price is Rs 7. The BSE REALTY is up by 0.7%. The top gainers in the BSE REALTY Index is JAIPRAKASH ASSO. (up 6.9%). The top losers are PHOENIX MILL (down 0.5%) and SOBHA LIMITED (down 1.4%).

RADICO KHAITAN Plunges by 5%; BSE 500 Index Down 0.4% (Today's Market)

Nov 21, 2018 10:23 AM

RADICO KHAITAN share price has plunged by 5% and its current market price is Rs 421. The BSE 500 is down by 0.4%. The top gainers in the BSE 500 Index are SPICEJET LTD (up 5.8%) and WOCKHARDT LTD. (up 4.5%). The top losers are RADICO KHAITAN (down 5.4%) and L&T INFOTECH LTD (down 5.6%).

Sensex Trades in Red; IT & Metal Stocks Drag (Today's Market)

Nov 21, 2018 09:30 am

Indian share markets open in red with Sensex down by 101 points, while the Nifty is trading down by 20 points.

View More Indian Share Market News

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