Mid & Small Caps the worst performers

Weakness across Asia made its presence felt in the Indian stock markets too as benchmark indices remained weak throughout and closed the day significantly in the red. Just as markets are yet to come to terms with the tapering of the Fed's quantitative easing, fresh liquidity concerns emerged out of China and this put further pressure on the indices. Thus, while BSE-Sensex edged lower by around 230 points today (down 1.2%), fall on the NSE-Nifty came in at around 80 points. BSE Mid Cap and BSE Small Cap indices fared even worse, losing around 2.6% and 2.2% respectively. Nearly four stocks fell for every one stock that closed the day in the green on the Sensex.

With regards to international markets, while Asian indices had a negative outing today, indices in the European markets are also trading lower currently. The rupee was trading at Rs 59.8 to the dollar at the time of writing.

With an aim to encourage cross selling of its products, Titan Industries has combined its loyalty programmes across three brands into one Encircle loyalty card. Earlier, the company followed the practice of running three separate loyalty programs each for its eye care, Tanishq and World of Titan range of products. However, after the current move, Titan's customers would be able to redeem points across around 950 stores of its different brands as opposed to just one channel earlier. The stock closed marginally lower today.

Tata Power, India's largest private sector power producer, is now eyeing international markets with the hope of having 5,000 MW generation capacity overseas. As per reports, feasibility studies for thermal power projects have already started in Vietnam and Myanmar. In each of these two countries, the company is initially planning to have capacities of 600 MW. Also on the radar are countries like Indonesia, the Middle East, South Africa, Bhutan, Georgia and Australia amongst others. It would be a long drawn process as feasibility studies usually take around 15-18 months with development of project using up another 3-4 years. The stock ended up nearly flat today.

Indian share markets languish in red
01:30 pm

Indian share markets continued to languish in the red in the post-noon trading session. All the sectoral indices are trading in the red with realty, consumer durables and capital goods stocks being the biggest losers.

BSE-Sensex is down 150 points and NSE-Nifty is trading 49 points down. BSE Mid Cap is trading down 2% whereas BSE Small Cap index is trading down by 1.6%. The rupee is trading at 59.6 to the US dollar.

Majority of the Indian pharma stocks are trading in the red with Ranbaxy and Panacea Biotech being the biggest losers. However, Fresnius Kabi and Glenmark Pharma are among the few stocks trading in the positive. As per a leading financial daily, Cadila Healthcare's FMCG subsidiary Zydus Wellness is on the look-out to acquire brands or buy an over-the-counter (OTC) products company. The company is scouting for brands in the nutraceutical, cosmaceutical and OTC segments. The subsidiary has chalked out Rs 5 bn from its cash reserves for the buyout. Zydus has three well known brands EverYuth, Sugar Free and Nutralite in its portfolio and will launch a fourth product, Just Pure, in a week's time. Cadila Healthcare's stock is trading marginally down.

Majority of the banking PSU stocks are trading in the red with Indian Bank and Bank of Baroda leading among the pack of losers. As per a leading financial daily, Delhi High court has asked Punjab National Bank (PNB), to deposit Rs 4.5 m in the illegal fund transfer case. Reportedly, the court asked the bank to deposit the damage amount with the Register General of the High court till the final disposal of its appeal. Further, the order passed by the court came on an appeal filed by PNB against the adjudicating officer's order. This was on the complaint filed by Poona auto ancillaries under the Information and Technology act. The complaint was about the fraudulent fund transfer from its current account at PNB Pune branch in Aug 2011. As per the complaint, the amounts were transferred in 40 transactions of Rs 0.2 m and one transaction of Rs 10,000. PNB was trading down by 2.7%.

Indian share markets remain in red
11:30 am

Indian share markets have remained in red in the last two hours of trade with metals as the only sector witnessing buying interest.

The BSE Sensex is down by 167 points and the NSE-Nifty is down by 60 points. BSE Mid Cap index is down by 1.7% while the BSE Small Cap index is up by 1%. The rupee is trading at 59.63 to the US dollar.

Food and Tobacco shares are trading on a mixed note with GSK Consumer and VST Industries leading the gains while United Spirits and Golden Tobacco are leading the losses. According to a leading financial daily, ITC's packaged foods division and personal care business are putting in place strategic plans this fiscal in a bid to sustain the company's growth momentum. ITC is betting big on research & product developments, distribution competencies and consumer engagement strategy to woo new consumers. ITC Foods, for example, is planning to scale up its business by drawing upon the agri-sourcing strength of the e-choupals, in-house cuisine knowledge, product development capabilities, packaging strategy and branding, sales & distribution competencies. ITC Personal on the other hand plans to invest in cutting-edge products, flexible manufacturing and supply chain operations to drive volumes in the soaps, skincare and shampoos categories. ITC's share is trading up by 0.7%.

All except two PSU Bank shares, United Bank of India and Bank of Baroda are trading in red. According to a leading financial news medium, Bank of Baroda (BoB), has reportedly unveiled its National Pilot Agri Loan Factory at Himmatnagar in Gujarat on June 21, 2013. By opening this new factory, the bank would give a boost to the State's agricultural sector. The Agri Loan Factory started off with a sanction of Rs 530 m in advances to the farm sector. Sanctioned cheques were also distributed to top borrowers. With this new 'Loan Factory' the bank would be providing all types of loans related to agriculture under one roof. Recently, the bank announced that it would be charging interest on home loans for new and existing customers at the base rate of 10.25% per annum across all tenures and for any amount. The single rate of interest for all home loan customers got effective from June 01, 2013.

Indian share markets open weak
09:30 am

All the major Asian stock markets have opened the day in the red with Hong Kong (down 1.6 %) and China (down 3.0%) leading the pack of losers. The Indian share markets indices have also opened the day on a negative note. Barring healthcare, all other sectoral indices have opened in the red with the stocks in the power and consumer durables space leading the losses.

The Sensex today is down by around 106 points (0.6%), while the NSE-Nifty is down by around 35 points (0.6%). Mid cap and small cap stocks have also opened in the red with BSE Mid Cap index and BSE Small Cap down by around 0.8% and 0.5% respectively. The rupee is trading at Rs 59.67 to the US dollar.

Indian Pharma stocks have opened the day on a mixed note with Glenmark Pharma Ltd and Orchid Chemicals Ltd leading the gains. However, Panacea Biotech and Piramal Enterprises were witnessing selling pressure. As per a leading financial daily, Ranbaxy Ltd's third and newly commissioned Mohali facility has come under the scanner of US Food and Drug Administration (USFDA). The latter has issued Form 483 to the company's manufacturing facility at Mohali a few months ago post finding deviations from its norms during an inspection of the plant. It is important to note here that Form 483 is issued by the FDA at the conclusion of an inspection to notify the company of objectionable conditions that might be in violation of the US Food, Drug and Cosmetic Act and related laws. However, it does not prevent a company from making regulatory filings from that unit. This is a negative development for the company as the Mohali unit forms an important part of Ranbaxy's strategy.

Telecom stocks have opened on a mixed note with Idea Cellular Ltd and Himachal Futuristic leading the gains. However, Tata Teleservices and AGC Networks Ltd are leading the losses. As per a leading financial daily, Bharti Airtel will slash 4G data charges by 31% from today. The move aims to boost demand for fourth-generation wireless broadband services. It is important to note here that Mukesh Ambani's Reliance Jio Infocomm is slated to roll out 4G services on a pan-India basis within this year. It is also likely to make things difficult for future challengers. As per the daily, Airtel will offer 4G speeds at 3G price points. Earlier, the company had cut 2G data charges by nearly 90% to boost data usage and revenue streams.

Why India lags behind China?

The global economy has slowed down significantly in recent years. While the developed economies have been struggling with high debt and flagging economic prospects, it was hoped that the emerging economies would continue their solid growth rates and herald the global recovery. But emerging economies too have started showing signs of weakness. While China is going through a choppy transition from an investment-driven export-oriented economy to a domestic consumption-led economy, India has its own set of problems in the form of economic slowdown, persistently high inflation, depreciating rupee, lack of reforms, etc.

Until some years back India and China were the fastest growing large economies, with India closing in at number two. In fact, it was argued that India's growth rate would soon trump China. But all expectations of sustained high growth rate have come under a cloud of doubt as growth has dropped to decade-low levels in recent years.

But does India lag China only in economic growth? We came across an interesting article by Nobel laureate Dr Amartya Sen. As per Dr Sen, aiming to achieve China's growth rate should not be our top concern. In fact, there are several other more critical areas where India lags far behind China.

The most important factor where India lags significantly from China is availability of essential public services such as healthcare, education, etc. India continues to have the dual problem of high illiteracy rate as well as poor standard of schools. Moreover, the public healthcare system is in a mess. While India may pride itself in being the world's largest producer of generic drugs, most poor people in the country have to rely on low-quality medicine. The reason for this is the lack of adequate expenditure on public health. For instance, China spends 2.7% of its GDP on public healthcare. Compared to that India spends a mere 1.2% of its GDP on public healthcare.

It is important to note that failure on providing these basic public services eventually takes a toll on our growth rates. As such, competing with China purely on growth rates is a misguided endeavour. Rather India should focus on the big picture and improve in these basic yet critical areas. If this is done, we believe high economic growth rates would follow in due course.