Capital goods & realty biggest losers

Fri, 24 Jan 01:30 pm

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Indian share markets continued to trade well below the dotted line in the post-noon trading session. Barring IT, all the sectoral indices are trading in the red with capital goods, realty and metal stocks being the biggest losers.

BSE-Sensex is down 199 points and NSE-Nifty is trading 68 points down. BSE Mid Cap is trading 1.4% down and BSE Small Cap index is trading down by 1.3%. The rupee is trading at 62.1 to the US dollar.

Majority of the Indian pharma stocks are trading in the red with Biocon and Dishman Pharma being the biggest losers. However, Divi's Laboratories and Fresnius Kabi are trading in the green. Biocon has been compelled to shift its numerous Indian projects to the US and Europe due to stringent regulatory requirements for clinical trials laid down by the Supreme Court. As per the new regulations, companies conducting clinical trials have to share clinical trial contract details with Drugs Controller General of India as well as an audi-visual recording of consent by the subject to participate in the trial.

Biocon has completed clinical studies for Itolizumab used in the treatment of psoriasis which was launched in India. The company also launched breast cancer drug Canmab jointly developed with Mylan and clinically tested it in India. However, ongoing research programme on oral insulin (IN-105) is taking a longer time. The company is also facing challenges for conducting clinical trials in India for a vaccine used in treatment of cervical cancer jointly being developed along with US-based Advaxis. Reportedly, the cost of conducting a trial in the US or Europe is 10-12 times higher as compared to India. As a result, the company's spend on research & development has more than halved to Rs 200 m in December quarter as many of the clinical trials have been deferred to the next quarter. These expenses are expected to increase in future as the company will have to incur trials outside India that are more expensive.

Majority of the chemicals stocks are trading weak today led by PI Industries, Godrej Industries and Rallis. As per a leading business daily, Tata Chemicals wants to enter the probiotics market by producing nutraceutical that targets and enhances digestive health. Nutraceutical is combination of nutrition and pharmaceutical that contains high-purity carbohydrate. For this the company would be commissioning its first nutraceuticals plant in Chennai soon. As per the company management, the plant has already started trail productions and would commission the commercial production in the next few months. According to an industry report, domestic nutraceutical market has been witnessing a healthy CAGR of 18.5% and is expected to touch Rs 195 bn by FY14. The stock of Tata Chemicals is trading lower by 0.8% today.