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Indian Share Markets Open Flat
Fri, 18 Nov 09:30 am

Asian markets were trading mixed in the morning trade, with the Japanese market leading gains on the back of a relatively weaker yen. The Shanghai Composite is up 0.17% while the Hang Seng is up 0.14%. The Nikkei 225 is up 0.84%. Meanwhile, stock markets in US finished on a positive note on the back of remarks from Fed Chair Janet Yellen and upbeat economic data.

Meanwhile, Indian share markets too have opened the day on a mixed note. The BSE Sensex is trading lower by 3 points while the NSE Nifty is trading lower by 6 points. The BSE Mid Cap index opened up by 0.5% while BSE Small Cap index opened flat. The rupee is trading at 67.91 to the US$.

Sectoral indices have opened the trading day on a mixed note with realty, oil & gas stocks leading the pack of gainers.

Pharma stocks are trading positive with Elder Pharma and Indoco Remedies leading the gains. As per an article in The Economic Times, Cadila Healthcare Ltd will transfer its India human formulations business to its wholly-owned subsidiary Zydus Healthcare Ltd on a slump sale basis for Rs 693 million.

The move comes as the company looks to hive off its India human formulations undertaking in India and consolidate into Zydus Healthcare. The scheme would bring more focused and concentrated efforts to grow the respective operations of both the companies.

As part of the scheme, a manufacturing plant at GIDC, Ahmedabad and pharmaceutical technology center in Ahmedabad will be transferred to Zydus Healthcare. However, the strategic business (Subscription Required) unit of biologics will not be transferred.

One must note that, Cadila Healthcare's India human formulations business has a turnover of Rs 13.7 billion in financial year 2015-16. It also accounts for 21% of the company's total turnover.

Cadila has entered into multiple alliances and joint ventures in the India (Subscription Required) and other geographies with big MNC players. Tanushree Banerjee, Co-head of Research is of the view that the subsidiaries and joint ventures are expected to pitch in to boost the topline growth of the company. She has recently shared a detailed view on the company and valuations in the recommendation report of The India Letter.

Cadila Healthcare's share price opened the trading day down by 1.3%.

In another development, a Livemint analysis of quarterly earnings of 53 members of the BSE-100 index shows that 28 of them have exceeded consensus earnings estimate by Bloomberg.

However, the sustainability of these earnings will much depend on the volume growth going ahead. Why do we say this? Since the preceding year, the commodity prices have stayed benign. Even when the topline growth has remained muted, the bottom line has remained strong on account of lower costs mainly on the back of lower commodity prices.

However, the commodity prices have slowly started moving northwards and hence it will be difficult to sustain the operating margins at the level as seen at present. This in-turn could dent the earnings.

Hence, volume growth is really important at this juncture to achieve a sustainable earnings growth moving ahead.

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