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Sensex Falls After RBI Dashes Hopes of Repo Rate Cut, Sun Pharma Tanks 6%
Wed, 7 Dec Closing

Indian share markets fell considerably in the final hour of trade after Reserve Bank of India unexpectedly kept its repo rate unchanged at 6.25%. At the closing bell, the BSE Sensex stood lower by 156 points, while the NSE Nifty finished down by 41 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished down by 0.2% and 0.5% respectively. Losses were largely seen in pharma, realty and banking stocks.

Asian markets finished higher today with shares in Japan leading the region. The Nikkei 225 is up 0.74% while China's Shanghai Composite is up 0.71% and Hong Kong's Hang Seng is up 0.55%. European markets are also trading higher with shares in Germany leading the region. The DAX is up 1.48% while London's FTSE 100 is up 1.30% and France's CAC 40 is up 1.13%.

The rupee was trading at 67.87 against the US$ in the afternoon session. Oil prices were trading at US$ 51.06 at the time of writing.

Shares of Sun Pharma extended their losing streak for fourth consecutive session and plunged 6% in today's trade after the company confirmed that its Halol facility had undergone an inspection by United States Food and Drug Administration (USFDA) recently. Reportedly, USFDA has informed Sun Pharma that the Halol facility has issued a 14-page Form 483 post inspection.

Concerns over Halol resurfaced after Sun's plant at Mohali received seven observations after a re-inspection by the USFDA (Subscription Required) last month. Significantly, it is the same team of FDA executives that re-inspected the Halol plant, too. It is to be noted that Sun Pharma's plant at Mohali is one of the facilities of former Ranbaxy.

As per the reports, USFDA clearance to Halol unit is key to its revenue growth, especially for US business that contributed nearly 50% to overall revenue in FY16.

Sun Pharma's Halol plant received a warning letter last year from the regulator due to past violations which has prevented new product launches from the facility in the US, Sun's largest market. That has slowed revenue growth at the company and imposed new costs to make the plant USFDA compliant. The latest USFDA inspection came after the company invited the agency back to review a year's worth of remediation efforts in the hope that the warning letter would be lifted.

Pharma stocks finished the day on a mixed note with Elder Pharma and Panacea Biotech leading the gains.

Moving on to news from stocks in mining sector. According to a leading financial daily, Coal India is likely to miss the year's target by a wide margin as power demand drops drastically. Coal India is already more than 40 million tonnes short of its sales goal in the first eight months of this financial year.

Coal India's sales in the eight months ending November were 340.3 million tonnes, trailing the target of 381.6 million tonnes. Production was 323.6 million tonnes compared with a target of 360.8 million tonnes. The company will have to produce 274 million tonnes in the remaining four months of this financial year to achieve the target of 597.6 million tonnes.

Coal India's Production Over the Last Few Years

The mining company's performance improved last year as demand for coal from the power sector increased by about 90 million tonnes. But a similar boost has been missing this year. The mining sector has been in trouble for quite some time due to lower than anticipated demand from utilities, coupled with improved generation from hydel and renewable energy.

Coal India's fuel supply to the power sector witnessed a decline of 3.7% to 216.5 million tonnes during the April-October period this fiscal. The government last month said there were no plans to cut down coal production as the demand had already picked up.

Coal India's share price finished the trading day down by 0.1% on the BSE.

And here's an Update on Bank Nifty on policy day from our friends at DailyProfithunter

Bank Nifty opened strongly with an upside gap. The index continued to show strength there by maintaining this opening gap area in expectation of positive monetary policy stance. At 2:30 pm, where RBI announced its monetary policy, the index slipped sharply to break the important support zone of 18,150 levels offered from 200 EMA, upside gap area and down sloping support line. In no matter of time the Bank nifty recovered sharply to minimize some of its losses ending the policy day at 18, 234 (-187) with 1% loss. The index was unable to break its crucial support zone of 18, 150 level on closing basis. This might be a sign of strength. To decide the near term trend, we wait until the tight trading range of 18,200-18,600 level is broken on either side.

Bank Nifty traded volatile on policy day

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