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Sensex Ends 572 Points Lower; Auto and Realty Stocks Witness Selling
Thu, 6 Dec Closing | Monish Vora, TM Team

Indian share markets witnessed most of the selling pressure during closing hours and ended their trading session on a negative note. All sectoral indices ended on a negative note with auto stocks, realty stocks, and oil & gas stocks losing the most.

At the closing bell, the BSE Sensex stood lower by 572 points (down 1.6%) and the NSE Nifty closed down by 182 points (down 1.7%). The BSE Mid Cap index ended the day down 1.5% and the BSE Small Cap index ended the day down by 1.4%.

The rupee was trading at 70.86 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 2.5% and the Shanghai Composite was down by 1.7%. The Nikkei 225 was down 1.9%.

In the news from the commodity space, the Organization of the Petroleum Exporting Countries (OPEC) has made a planned cut in oil output effectively conditional on the contribution from non-OPEC producer Russia.

The above development comes as the group gathered in Vienna for a meeting aimed at supporting oil prices.

As per the news, the group was waiting for news from Russia as Energy Minister Alexander Novak had flown back from Vienna for a possible meeting with President Vladimir Putin.

The OPEC plus Russia and other allies are meeting on 6th and 7th December. Producers are discussing a supply curb of 1 million to 1.4 million barrels per day (bpd) and possibly more.

The OPEC meeting in Vienna will follow a gathering by the Group of 20 (G20) nations in Argentina, at which oil policy is expected to be discussed. The meet will also potentially lay the groundwork for an OPEC deal.

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Recently, Qatar announced that it is quitting next month to focus on liquefied natural gas (LNG) production. This was a big blow faced by OPEC.

Qatar's energy minister Saad Sherida al-Kaabi dismissed the notion that the move was driven by Doha's ongoing feud with OPEC's de facto leader Saudi Arabia.

Note that OPEC's de-facto leader Saudi Arabia wants the cartel and its allies to cut output by about 1.4 million barrels per day (bpd), around 1.5% of global supply.

However, while OPEC is considering withholding supply, US crude oil production reached another record high last week at 11.7 million barrels per day (bpd), according to U.S. Energy Information Administration (EIA). So, this, on the other hand, is helping cap the sharp rise in crude oil prices.

Note that high crude oil prices can be a big worry for the Modi government as well as it has been a big beneficiary of lower crude oil prices.

Also, note that India's crude oil production was lower by 4.2% in September 2018 as compared to last year.

The worrying factor is this was the lowest production this year

It's also interesting that almost every time a rise or fall in the stock markets is invariably linked to crude oil prices.

Logically, it seems right too. Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening. After all, there is an election year coming up.

But has it really affected the stock markets?

Here's what Girish Shetty wrote about it on one of the editions of The 5 Minute WrapUp...

  • In the short-term: Yes.

    But in the long run, as we can see, Sensex returns have been independent of crude oil prices or even positively co-related!

    Crude oil prices doubled from US$ 41 in December 2008 to US$84 in April 2010. In the same time, Sensex also doubled from 8,800 levels to 17,600 levels.

    So, please don't fret unnecessarily about crude oil.

    Check if your business has a moat that helps it pass on input price increases to its customers. In the long run, they will survive and also gain market share from those that can't pass on prices. Short term pessimism due to rising crude oil prices provides a buying opportunity in these stocks.

As per him, focusing on quality stocks rather than crude oil will matter more in the long run.

In the news from pharma space, Alembic Pharmaceuticals share price was in focus today as the company said it plans to raise up to Rs 5 billion through issue of non-convertible debentures (NCDs) on private placement basis.

The company in a filing said that its board of directors today approved the issue of unsecured listed redeemable NCDs of up to Rs 5 billion on private placement basis under a shelf disclosure document in multiple tranches.

Alembic Pharmaceuticals yesterday also announced it has received approval from the US Food & Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) Candesartan Cilexetil tablets USP, 4 mg, 8 mg, and 16 mg.

The approved ANDA is therapeutically equivalent to the reference listed drug product (RLD), Atacand Tablets, 4 mg, 8 mg, and 16 mg, of ANI Pharmaceuticals, Inc.

These tablets are indicated for the treatment of hypertension in adults and in children to lower blood pressure. They are also indicated for the treatment of heart failure.

Candesartan Cilexetil Tablets have an estimated market size of US$22 million for twelve months ending December 2017 according to IQVIA.

The company has a cumulative total of 82 ANDA approvals (69 final approvals and 13 tentative approvals) from USFDA.

To know more about the company, you can access to Alembic Pharma's Q2FY19 result analysis and Alembic Pharma's Stock Analysis on our website.

Speaking of pharma sector, note that the BSE Healthcare Index has been on a roller coaster ride in the past few years. The period from 2012 to 2015 saw the index go up more than three times.

And since then it has been a painful ride downwards, as can be seen from the chart below:

The Roller Coaster Ride of the BSE Healthcare Index

As we wrote in one of our editions of The 5 Minute WrapUp...

  • Pre-2015, pharma companies enjoyed a fairytale ride in the US market. Low labor costs, good chemistry skills, along with efficiency, ensured Indian companies could copy innovator drugs to make generic drugs at a fast pace.

    The generic business had lucrative margins for all major pharma players. But the party did not last long. In the quest to supply drugs quickly, they compromised on quality at their manufacturing facilities.

    No wonder,the US regulatory authority (USFDA) took strict action. Sun Pharma received a warning letter for its Halol manufacturing facility in 2015. It was like a bolt out of the blue. Since then, the downward spiral began and has continued till date.

We believe that pharma companies that invest in creating a pipeline of complex generics or building competencies in alternative dosage forms are better equipped to tackle the changing dynamics in the US generics market as well as in the overall industry.

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

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Stock Market Updates

EDELWEISS FINANCIAL Plunges by 5%; BSE 500 Index Down 1.1% (Today's Market)

Mar 25, 2019 02:44 PM

EDELWEISS FINANCIAL share price has plunged by 5% and its current market price is Rs 194. The BSE 500 is down by 1.1%. The top gainers in the BSE 500 Index are RURAL ELECTRIFICATION (up 8.7%) and TTK PRESTIGE (up 5.9%). The top losers are EDELWEISS FINANCIAL (down 5.0%) and BOMBAY DYEING (down 5.5%).

MAGMA FINCORP Plunges by 5%; BSE 500 Index Down 1.1% (Today's Market)

Mar 25, 2019 02:10 PM

MAGMA FINCORP share price has plunged by 5% and its current market price is Rs 109. The BSE 500 is down by 1.1%. The top gainers in the BSE 500 Index are RURAL ELECTRIFICATION (up 8.7%) and POWER FINANCE CORPORATION (up 4.9%). The top losers are MAGMA FINCORP (down 5.0%) and BOMBAY DYEING (down 5.4%).

JINDAL SAW LTD Plunges by 5%; BSE METAL Index Down 1.5% (Today's Market)

Mar 25, 2019 02:08 PM

JINDAL SAW LTD share price has plunged by 5% and its current market price is Rs 89. The BSE METAL is down by 1.5%. The top gainers in the BSE METAL Index is COAL INDIA (up 0.7%). The top losers is JINDAL SAW LTD (down 5.1%)..

JAIPRAKASH ASSO. Plunges by 5%; BSE REALTY Index Down 2.1% (Today's Market)

Mar 25, 2019 02:04 PM

JAIPRAKASH ASSO. share price has plunged by 5% and its current market price is Rs 6. The BSE REALTY is down by 2.1%. The top losers is JAIPRAKASH ASSO. (down 5.3%).

RURAL ELECTRIFICATION Surges by 10%; BSE 500 Index Down 1.0% (Today's Market)

Mar 25, 2019 01:30 PM

RURAL ELECTRIFICATION share price has surged by 10% and its current market price is Rs 155. The BSE 500 is down by 1.0%. The top gainers in the BSE 500 Index is RURAL ELECTRIFICATION (up 10.1%). The top losers are TORRENT PHARMA and GAIL .

Sensex Opens Over 300 Points Down; Realty and Metal Stocks Drag (Today's Market)

Mar 25, 2019 09:30 am

Indian share markets open in red. The BSE Sensex opened down by 343 points, while the Nifty is trading down by 96 points.

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