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The Indian share markets witnessed some selling pressure during the afternoon session and finished the day below the dotted line ahead of US Fed rate decision to be announced today. At the closing bell, the BSE Sensex closed lower by 95 points, whereas the NSE Nifty finished down by 39 points. The S&P BSE Midcap & the S&P BSE Small Cap finished down by 0.8% and 0.9% respectively. Barring information technology and realty stocks, all sectoral indices ended the day in red. Metal and PSU stocks led the losses.
Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.04% and the Nikkei 225 rose 0.02%. The Shanghai Composite lost 0.46%. European markets are lower today with shares in France off the most. The CAC 40 is down 0.32% while London's FTSE 100 is off 0.24% and Germany's DAX is lower by 0.15%.
The rupee was trading at Rs 67.56 against the US$ in the afternoon session. Oil prices were trading at US$ 52.37 at the time of writing.
According to Consumer Price Index (CPI) data released by the Central Statistics Office (CSO), the annual retail inflation eased last month to 3.6% from 4.2% in October and 5.4% reported during the corresponding period last year.
The data was driven largely by lower than expected food prices. Core inflation (excluding petrol, diesel, and precious metals) decelerated 4.7% in November from 4.8% in October, the reports noted.
Backed by the depressed consumer demand owing to Prime Minister Narendra Modi's move of November 8 to remove high-value banknotes disrupted daily life weighed largely on the rates. Moreover, the fall in CPI was mainly due to a drop in the annual food inflation. The food inflation had a 47% weight in CPI which declined to 2.1% in November from October's 3.3%. Food inflation in November last year stood at 6.1%.
For the month under review, urban CPI inflation came in at 3.1% (4.7% in November 2015). Rural CPI inflation for the month under review stood at 4.1%. Vegetables continued to witness deflation. Pulses saw inflation falling to 0.2% in November, from 4.1% in the previous month.
Reportedly, the overall fall in retail inflation was on the back of a favorable base effect coupled with some downside due to the demonetisation move.
Having said that, November's reading is way below the Reserve Bank of India's (RBI) 5% inflation target for March 2017 as well as the medium-term target of 4%. Going forward, whether RBI goes for a repo rate cut at its next monetary policy review due in February 2017 will be the key thing to watch out for.
Moving on to the news from stocks in Pharma sector, As per an article in Livemint, Lupin has received final approval for its Desoximetasone Ointment USP, 0.05% from the United States Food & Drug Administration (USFDA) to market a generic version of Taro Pharms North's Topicort Ointment.
The ointment is indicated for the relief of the inflammatory and pruritic manifestations of corticosteroid-responsive dermatoses. As per IMS MAT September 2016 sales data, Topicort Ointment had US sales of US$ 12.1 million.
One must note that, Lupin had received final approval for its Desoximetasone Ointment USP, 0.25% from USFDA to market a generic version of Taro Pharmaceuticals, Inc.'s Topicort Ointment, 0.25% on 6 December 2016.
The pharma industry as whole is undergoing regulatory crackdowns. Considering the pharma's regulatory distresses, are Indian pharma companies now adapting to the scrutiny by the USFDA? (Subscription Required). Our pharma sector analyst, Bhavita Nagrani, is of the opinion that Lupin was able to insulate its growth despite rising pressures in the sector. She has recently shared a detailed view on the company and valuations in the recommendation report of The India Letter.
Lupin's share price ended the day down by 0.4%.
The Dow Jones Index has been on a tear ever since Donald Trump was announced as the next US President. The index had closed at a level of 17,888 on November 4 before the results were announced. Yesterday the index closed just short of 20K at 19,911. This has been one of the longest winning streaks for the index.
The Federal Open Market Committee (FOMC) policy review will end today. It is widely expected that the Fed could raise interest rates. Market participants will look for cues on the timing of rate hikes next year. Chances of positive surprises for markets look limited irrespective of the outcome. The index has rallied more than eleven percent in about a month. The daily momentum indicators are also ruling in the highly overbought territories.
We will keep a close watch on how the events unfold. You can also stay updated with this and many other global events by reading our weekly market commentary published by the team at Daily Profit Hunter.
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