Markets end day at record high!

After gaining significant ground during the post noon trading session, the Indian stock markets ended the day on a record note. The BSE-Sensex closed higher by about 557 points or 2.4%, an all time high. The NSE-Nifty too closed higher by about 155 points or 2.2% and breached the psychological mark of 7,000 points. Barring stocks from the healthcare space, all the sectoral indices closed in the green. Even the BSE Mid Cap and BSE Small Cap indices ended the day on a positive note, with both the indices closing higher by about 0.7% and 0.5% respectively.

However, stock markets in other parts of Asia ended the day on a mixed note. The rupee was trading at Rs 59.84 to the dollar at the time of writing.

Most of the stocks from the Indian pharma sector have closed the day in the red. Leading the pack of losers were Indoco Remedies and Panacea biotech. Ranbaxy has declared results for the quarter ending March 2014 and for 15 months period, as the company has changed its accounting year from December end to March end. Net sales declined by 1% YoY during the quarter, due to lower sales in most of its segments. Large part of growth was impacted due to decline in API sales on back of shut down of operations in its API facility at Toansa and Dewas. Toansa plant had received import alert from the USFDA regulators some time back. However the company has voluntarily withdrew the production at Toansa and Dewas both as it wanted to take judicious steps to remove all inefficiencies in these plants. The operating margins marginally declined by 30 basis points during the quarter. The company reports a loss of Rs 736 m in for the quarter against profit of Rs 1.25 bn during March 2013 quarter. The company has incurred some write offs due to import bans at its API facility, this too impacted the bottom line. Ranbaxy closed down by 1.65%.

The last leg of voting will end today. While this may be the last leg of a month long election affair, voter enthusiasm continues to remain high. Brisk polling was recorded in all the 41 constituencies that went for elections today. The 16th Lok Sabha elections were truly cacophonic. Political parties left no stones unturned to woo electorates. The UPA led government faced severe criticism for failing to curtail price rise and corruption. And the chief opposition party was dubbed communal. Many politicians played the caste card while some indulged in personal attacks too. In short, these elections were nothing short of being euphoric. While the fate of all 543 candidates will be decided by the end of day today the results will be announced on 16th May. The citizens of India are eagerly waiting for the verdict. All are hoping that the new government will do a better job than existing one. However, only time will tell whether it would happen or not.

Indian share markets trade strong
01:30 pm

The Indian markets continued to trade at stratospheric levels during the previous two hours of trading session on account of continuous buying activity among the index heavy weights. Except the healthcare sector, all sectoral stocks are trading positive. Buying interest is heavy among the energy and banking sector stocks.

The BSE Sensex is trading up 426 points and the NSE-Nifty is trading up 116 points. The BSE Mid Cap index is trading up 0.7% and the BSE Small Cap index is trading up 0.5% today. The rupee is trading at 59.72 to the US dollar.

Majority of the domestic pharma stocks are trading in the red with Panacea Biotech and Indoco Remedies being the biggest losers. As per a leading financial daily, Cipla has invested $21 m in US-based Chase Pharmaceuticals through its wholly owned subsidiary in UK. Chase Pharmaceuticals is a drug development company focusing on novel treatments for Alzheimer's disease. The investment is to support phase 2a and phase 2b of clinicla trials for Chase's lead drug CPC 201. Additionally, Cipla will also collaborate with Chase for the development of the drug which will be sold by the former as low cost medicine in India and South Africa. This investment is consistent with the company's philosphy of providing affordable medicines and building innovative business streams. Reportedly, five million people in India are suffering from dementia with a majority of them afflicted with Alzheimer's disease. By 2018, these figures are likely to double. Cipla stock is currently trading down 1.7%.

Large capitalization software stocks are trading mixed today. While Infosys and Tech Mahindra are trading higher, Wipro and HCL Infosystems are trading on a weak note. As per a leading business daily, Tech Mahindra plans to consider an acquisition in order to lower its dependence on the telecommunications business. In fact, it may opt for businesses that are focussed on the niche segment. Around 47% of Tech Mahindra's revenues are from the telecom sector.It plans to lower the same and increase its exposure in other sectors like healthcare and retail. A Gartner, the independent research institution on IT sector, expects software spending from telecommunication players to grow by 1.3% this year as compared to spending growth of 4.6% in other industries. So the move is to enable Tech Mahindra of expand its offering and caters to the high growth business verticals and simultaneously lower its concentration to the single segment.

Markets trade at life highs
11:30 am

After opening firm, the Indian Indices are trading at life highs in the morning. All indices except the pharma and IT indices are trading positive. The buying interest is highest in banking and engineering and auto stocks.

The BSE Sensex is trading up 420 points and the NSE-Nifty is trading up 118 points. The BSE Mid Cap index is trading up 1.1% and the BSE Small Cap index is trading up 0.8% today. The rupee is trading at 59.69 to the US dollar.

Mostsoftware stocks are trading lower today. Tata Consultancy Services (TCS) and Wipro are leading the losers. As per a leading financial daily, Indian IT firms are gaining a foothold in Europe. The continent is proving to be a lucrative market as many European companies are more open to outsourcing than before. European countries are slowly recovering from the economic crises of the last few years. Senior managements of several large European companies are under pressure to cut costs and have become more open to the idea of outsourcing. Indian IT firms are also looking for acquisitions in the continent to deepen their skills as well as hiring more local talent to integrate better with European business culture.

Indian Pharmaceutical stocks are trading mixed today. Torrent Pharma and Elder Pharma are leading the gainers. Panacea Biotech and Indoco Remedies are leading the losers. According to a leading business daily, Daiichi Sankyo, the Japanese drug maker which has controlling share in Ranbaxy Laboratories has moved the Andhra Pradesh High Court in order to challenge the court's interim order to maintain status quo on the sale of Ranbaxy to Sun Pharmaceuticals. The high court has directed NSE and BSE to not to approve the merger following a petition filed by retail investors where they have alleged insider trading in the merger deal. As per the allegations, Silver Street, a limited-liability partnership firm owned by two subsidiaries of Sun Pharmaceuticals was involved in the insider trading of Ranbaxy. Before the announcement of the deal on April 6, 2014; Shares of Ranbaxy witnessed an unusual increase in price and turnover during the six trading days.

As per the petition filed by Daiichi, the alleged insider trading and scheme of merger are two independent issues. Hence, the court cannot stall the merger for alleged insider trading. Daiichi also informed the court that the "submission of the scheme of arrangement to the stock exchanges is not for the purpose of seeking approval of the said scheme". The stock exchanges have powers only to issue observation letter to the scheme, which will be informed to the shareholders and high courts for their consideration. Daiichi also alleged that the retail investors "misled" the court by stating that the approval of stock exchanges was required for the scheme of arrangement. Sun Pharmaceuticals and Ranbaxy are trading 1% and 1.1% down today respectively.

Indian share markets open firm
09:30 am

The major Asian stock markets have opened the day on a mixed note with stock markets in Taiwan (down 0.6%) and Singapore (down 0.6%) leading the losses. However, the stocks markets in Hong Kong (up 1.7%) and Korea (up 0.4%) were leading the gains. The Indian share markets have opened the day on a positive note. Barring healthcare, software and consumer durables, all sectoral indices have opened in the green with stocks in energy and banking space leading the gains.

The Sensex today is up by around 288 points (1.3%), while the NSE-Nifty is up by about 83 points (1.2%). The midcap and smallcap stocks have also opened in the green with BSE Mid Cap and BSE Small Cap indices up by around 0.5% and 0.4% respectively. The rupee is currently trading at Rs 59.49 to the US dollar.

PSU Banking stocks have opened on a mixed note with State Bank of India and Indian Bank leading the gains. However, Corporation Bank and Punjab & Sind Bank were leading the losses. Corporation Bank has announced results for the quarter ending March 2014. The total income during the quarter was up 8.6% year on year (YoY). However, the net profit during the quarter declined 88.3% YoY on account of higher provisioning and increase in bad loans. The bank made provisioning towards bad loans to the tune of Rs 8.2 bn during the quarter. This was significantly higher than Rs 4.6 bn reserved a year ago. The net non-performing assets (NPAs) or bad loans jumped to 2.32 % in the quarter from 1.19 % a year earlier.

Energy stocks have opened the day mainly in the green with Reliance Industries Ltd and Gujarat Gas Ltd leading the gains. As per a leading financial daily, Oil and Natural Gas Corporation (ONGC) Ltd's wholly owned subsidiary ONGC Videsh Ltd (OVL) is likely to bid for deep-sea oil and gas blocks in Tanzania as it focuses on expanding its footprint in energy rich Africa. OVL currently has producing and exploration assets in Sudan, South Sudan, Nigeria and Libya. Tanzania is offering eight blocks in its fourth Offshore Licensing Round. The management is examining the blocks on offer and will decide to place bids for one or more based upon the evaluation. It is not yet decided if OVL will bid alone or take a partner.

Urbanization: A big concern

Urbanization is an important measure to judge economic, social and political progress of a country. There is a direct correlation between the country's development and physical growth in its urban areas. In India, the urban areas have witnessed good growth and better lifestyle in past couple of decades. However there have been mired by various problems. The rising scale of the urban population, jumbled and unplanned growth of urban areas, lack of infrastructure and poor living conditions have led to serious socio-economic problems. India's metro cities are not so well planned so as to accommodate the increasing population.

As the country is in the midst of elections and outcome is soon expected, the political parties are coming up with various promises to bring revolution in economy. An article in Business standard, states the views of a known Indian Economist Shankar Acharya. As per Mr. Acharya, India is much in need of revamping of urban institutional structures and policies for the existing cities, rather than build new costly cities.

In our view both, whether it is building a new city or revamp the existing policy, both require hard efforts from the governments. Even with new government coming in, one should note that major factors that influence the current urbanization problems will continue to remain the same until the necessary steps taken towards rejuvenating the overall economy. The issues of soaring prices, increasing cost of living, growing unemployment have left the country in sorry state. Not only that there are many other problems like power supply, restrictive labor laws and poor infrastructure that the country's businesses face today. Unless the government comes out with some real reforms and also commits significant capital, we may not be able to make significant headway.

Do you think that solving the problems of existing cities is more important than creating new urban centers? Share your views in the Equitymaster Club.