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Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
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Indian indices trade flat 
(Mon, 2 Sep 11:30 am) 
 
After opening in the green, Indian share markets continued to trade flat in the last two hours of trade. All the sectoral indices are trading in the green today.

BSE-Sensex is trading up by 174 points and NSE-Nifty is trading up by 46 points. BSE Mid Cap and BSE Small Cap index both are trading up by 1%. The rupee is trading at 65.8 to the US dollar at the time of writing.

Most of the Indian pharma stocks are trading positive today barring few like Wockhardt and J.B. Chemicals. The stock of Wockhardt is suffering on bourses in the event of a likely 'import alert' on its manufacturing unit at Chikalthana in Maharashtra. The manufacturing facility has recently received '483' observations after the US Food and Drug Administration (FDA) and the UK Medicines and Healthcare Products Regulatory Agency (MHRA) conducted inspections at its plant in July. Form FDA 483 is a form which is used by the USFDA to raise and document concerns discovered during the inspection. In the June quarter conference call, the company's Managing Director, Mr. Murtaza Khorakiwala had admitted that some of the issues were serious and they have already responded to the concerns raised by FDA and MHRA. According to a leading business daily, the concerns could be some serious hygiene issues and can bring charges of non-compliance of good manufacturing practices (GMPs).

If the Chikalthana facility receives an import alert, the impact could be severe. This is because in 2013, this facility contributed approx US$ 230 m to sales (25% of FY13 revenues) and the company's key product Toprol XL is also manufactured here. Wockhardt is trading down 3.1% today.

Telecom stocks are trading mixed today. Reliance Communications and MTNL are in the green, while Bharti Airtel and Idea are trading in the red. According to a leading business daily Bharti Airtel is in the running to acquire Loop Mobile. While discussions between the two companies for a possible takeover were going on for quite some time, it has now moved to an advanced stage. However a final deal is dependent on clarity on guidelines governing mergers and acquisitions in the telecom sector. Moreover Loop's license expires in September 2014 and the company is in litigation against the government as it argues that it is eligible for a 10-year license extension. Bharti, whose license in metro cities is expiring at the same time, also has a similar case in the Supreme Court. The acquisition of Loop will help Airtel become the leader in Mumbai in terms of number of subscribers, thus propelling it to the top slot in the key metros of Delhi and Mumbai.

The deal, however, hinges on key regulatory issues and will close only when there is clarity on them. Notably, the quantum of license renewal fee that has to be paid in 2014, along with the M&A guidelines. Loop would be a more valuable asset if it could renew its license for another 10 years. Moreover, the guidelines for telecom sector M&As may impose a spectrum acquisition fee for non-market trades.

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