Metal, realty sectors aid indices

Tue, 22 Dec 12:30 pm

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After witnessing a strong start, the Indian stock markets remained upbeat and inched further up during previous two hours of trade. Currently, buying activity is being witnessed across sectors with metal, realty, consumer durables and banking gaining the most. However, IT stocks are being favoured the least.

BSE sensex and NSE Nifty traded in the positive, up by 112 point and 37 points respectively. Midcap and small cap stocks are also trading in the positive, up by 1.07% and 1.3% respectively. The rupee is trading at 46.79 to the dollar.

As per a leading business daily, in a strategic move to ramp up its businesses in the major emerging markets, Dr Reddy's DRL is planning to buy some brands in Russia as well as introduce some new products in India. It may be noted that the company till a few years back ranked amongst the top 10 pharma companies in India. However its ranking slipped to 13th on account of management's lack of focus on India and fewer new drug launches. It has a market share of aout 2.7% of Rs 370 bn Indian drug retail market. Nevertheless, it aims to become a US$ 3 bn company by 2013 for which it is eyeing incremental growth from the emerging markets like India and Russia. India and Russia contributed around 12% each to company's topline of Rs 18 bn in 2QFY10. The company has recently entered an agreement with GSK as per which GSK will market few of DRL's drugs in markets where the latter has no presence.

We believe this is a good move as this will allow DRL to focus attention on emerging markets in Russia and India. The company derives about 80% of its revenues from the international markets. In the US, world's largest pharma market, the company aims at launching around 15 products in FY10. It is also aiming to garner the exclusivity window for atleast one product every year for the next five years.

According to a leading business daily, experts from the IT industry are expecting the sector to grow in double digits in the next fiscal. TCS' vice-chairman, Mr Ramadorai seconds this view. He hints of a robust deals pipeline both, in the domestic as well as international market. The condition in the US, the major market for almost all Indian IT companies is also stabalising. TCS has begun to see renewed traction and opportunities, albeit slower growth in FY10.

We believe positive momentum in the IT industry is evident from the job market scenario which appears to be reviving after a lull of over an year. As for TCS, the company like its peers has a renewed focus on domestic IT market as the new growth driver. It is already running pilot projects for a crop advisory service to rural farmers on mobile phones.