Indian stock markets indices could not hold on to their early morning gains and moved into the negative zone during the previous two hours of trade. All sectoral indices were trading weak except for FMCG, healthcare and IT stocks.
Pharma stocks are mainly trading in the green led by Orchid Chemicals and Stride Arcolabs. As per a leading financial daily, Dr Reddy's Laboratories has exited the business of drug research on diabetes and cardiovascular problems. It may be noted here that pharma companies are shying away from conducting new drug research as the costs of conducting clinical trials has gone up. Dr Reddy's too is citing the same reason for this move. The pharma company was in the process of developing an anti-diabetes drug "Balaglitazone" for diabetes and the research had reached phase-3 where it was discontinued. Another diabetes drug "CETP Inhibitor" is in phase-2 but had to be kept aside. As per industry experts, the diabetes segment is highly regulated. It requires cardio trials over a period of time to prove the side-effects that drugs in this segment may have. This makes research even more costlier for diabetes drugs.
Banking stocks are trading weak today led by UCO Bank and Union Bank. As per a leading financial daily, the Reserve Bank of India has asked all banks to comply with the Know Your Customer (KYC) norms or Anti- Money Laundering standards. In the event of non-compliance with these, the banks will have to face penalty under Banking Regulation Act, 1949. All banks have to prepare a risk profile of their customers and perform due diligence on the customers with higher risks. The Reserve Bank Of India (RBI) stated that for this, the Indian Banks' Association has taken steps towards assessment of money laundering and financial terror and risk in the sector. The IBA provides for a probable list of high risk customers, products, services and geographies that may prove to be useful to the banks.