Indian stock market languished in the red throughout the trading session today on the back of relentless selling pressure across heavyweights. Although there was some buying seen at lower levels in the afternoon session, these attempts were not enough to push the indices above the dotted line. There was no respite in the final trading hour as well and the indices closed well into the red. While the BSE-Sensex closed lower by around 275 points (down 2%), the NSE-Nifty closed lower by around 77 points (down 2%). The BSE Mid Cap
and the BSE Small Cap
were not spared either as they closed lower by 1% each. Losses were largely seen in auto and oil & gas stocks.
As regards global markets, Asian indices closed weak today while the European indices have also opened in the red. The rupee was trading at Rs 52.25 to the dollar at the time of writing.
Barring National Thermal Power Corporation (NTPC) and Reliance Power, most power stocks closed in the red today. As per a leading business daily, about 14,000 MW of capacity addition in the pipeline for power companies based on Indonesian coal is likely to hit a roadblock. This is because Indonesia has made it mandatory for coal exports to be benchmarked to international prices. Players such as Tata Power, Reliance Power, JSW Energy and the like had aggressively bid in the competitive bidding process for power projects, based on agreements they had made for fuel stock from Indonesia. However, these companies had worked the financials of their projects factoring in the coal price they had entered into in Indonesia for long-term supply. This in some cases was about US$ 26 to US$ 30 a tonne, which are almost half the benchmark prices. The problem is that many Indian power players have to depend upon imported coal as Coal India despite the huge opportunity in this sector is not able to address their requirements. Hence, some solution will have to be worked out with the Indian government, if power projects in India are not to be stalled.
As per a leading business daily, Lupin has received a preliminary injunction from the US district court in Jersey, which will prevent the company from selling the generic version of anti-diabetes drug 'Fortamet' ('Metformin ER'). It must be noted that Lupin had launched this drug in the US as an 'at-risk' launch despite the patent suit against it. Because it was the first-to-file for this drug, it was eligible to receive the 180-day exclusivity. Although the US court has stopped the company from selling more of the drug, it declined a request made by Japan's Shionogi Inc. to recall the product which is already there in the US market. 'Fortamet' had generated annual sales of US$ 70 m. That said, the court ordered Shionogi to post a bond of US$ 15 m in the interim, which will be paid to Lupin if the latter wins the case. Given that the US generics market is highly competitive, players are increasingly looking to sustain revenues by launching niche products having limited competition or challenging patents on drugs. Given that Lupin's was an 'at-risk' launch if it loses the case, the possibility of doling out damages cannot be ruled out. The stock closed lower today.