Heavy weights boost markets

Mon, 17 Jan 11:30 am

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After opening the day in the red, Indian indices are now trading firm as buying interest in heavy weights fuelled the markets over the previous two hours of trade. Stocks from the IT and FMCG space are trading firm, while stocks from the power and capital goods space are trading weak.

The BSE-Sensex is up by 82 points, while Nse-Nifty is trading 19 points above the dotted line. BSE Midcap is trading down by 0.4%, while BSE Small cap index is trading 0.3% below Friday's closing. The rupee is trading at 45.51 to the US dollar.

Pharma stocks are trading mixed with Orchid Chemicals and Lupin trading firm, while Glenmark and Biocon are trading weak. As per a leading financial daily, Glenmark has lost a patent case against US firm, Abbott Laboratories over the hypertension drug Tarka. Glenmark has to now pay US$ 16 m in damages to the US firm. It may be recalled that Glenmark had launched Tarka in June last year after it got US FDA's final approval to launch the generic version of the drug. However, the original patent was sold to Abbott by Sanofi Aventis earlier for US$ 290 m.

Abbott had filed a suit in court seeking US$ 25 m as compensation for profits it lost because of Glenmark's sales of the generic drug. Glenmark had challenged the validity of the patent that expires in February 2015, arguing that the patent covered an invention that was protected by an expired patent. The federal jury rejected Glenmark's claim and awarded US$ 15.2 m for lost profits and US& 803,514 for higher prices that Abbott would have been able to charge, had Glenmark not infringed the patent. However, Glenmark plans to appeal against the verdict. This highlights the riskiness of making 'at-risk' launches as it means doling out damages if the challenging generics company loses the patent suit.

Hotel stocks are trading weak led by Hotel Leelaventure and Taj GVK. As per a leading financial daily, the budget to mid-scale segment will be the new battle ground for both foreign and domestic hotel brands in India. This is because of the huge demand-supply mismatch in this segment. International brands like Carslon Hotels plans to launch 25 mid-scale hotels in the next 2-3 years while of the 100 hotels being launched by Marriott group, 40 will be in the mid-scale segment. Comfort Inn also plans to launch over 50 mid-scale hotels in India. It may be noted that Knight Frank India, in a recent report has estimated that demand for mid-scale and economy hotels in India will grow at an average annual growth rate of 9.3% YoY. Domestic players like IHCL, Sarovar Hotels & Resorts and Pride Group are also among those with aggressive plans for mid-scale and budget brands. IHCL plans to increase its mid-scale offering of Ginger Hotels from 23 properties to 80 properties in the next 5 years. The company also plans to launch a brand that will be positioned between The Gateway (upscale segment) and the Ginger brands.