Indian stocks buck weak Asian trend

Mon, 14 Mar 09:30 am

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Asian stock markets have opened the day on a weak note with Japan trading lower by 5% on account of the devastating impact of a massive earthquake and tsunami. Besides the mounting death toll, three nuclear reactors were at risk of overheating, raising fears of an uncontrolled radiation leak. However, Indian stock markets have managed to buck the trend and are trading firm on the back of buying across index heavyweights. Barring IT and auto stocks, buying is being seen across sectors.

The BSE-Sensex is trading higher by around 89 points (up 0.5%), while the NSE-Nifty is up by around 34 points (0.6%). Mid and small cap stocks are also trading in the positive, with the BSE Midcap index and BSE Small cap index up by 0.4% and 0.5% respectively. The rupee is trading at 45.2 to the US dollar.

After a dismal FY09, when the number of US FDA approvals was quite low, Glenmark has much to cheer about in FY11 so far. As per a leading business daily, in the first eleven months of the fiscal, Glenmark secured nods to sell as many as 21 new generic medicines in the US. Close on its heels are Aurobindo Pharma and Sun Pharma with 16 and 12 approvals respectively. Given the intensity of the competition in the US generics market, this is a huge positive for the company. That said, the company does not have any first-to-file opportunities (which would have given it a 180-day exclusivity) so far this year as compared to some of its larger peers who are focusing on such products to garner more revenues and profits. At the same time, Glenmark is targeting drugs having an annual market size of around US$ 50-300 m. This means that larger players may not be too interested in these drugs and this could possibly lead to lesser competition. At the end of the day, to have s sustainable generics business in the US is to keep up the flow of new product launches and also focus on products which have lesser competition and thereby lower price erosion. The stock is trading higher currently.

Auto stocks are trading mixed currently. While Ashok Leyland and TVS Motor are finding favour, Hero Honda and Bajaj Auto are in the red. As per a leading business daily, two-wheeler company TVS Motor is looking re-enter the Indian electric scooter market with some existing and new models in the next fiscal. The company is currently carrying out test runs of about 50 electric scooters across various towns in the country. It must be noted that in early 2008, TVS had launched electric scooterette 'Scooty Teenz Electric' and had envisaged selling around 40,000 units per year. However, it stopped the production in May 2009 as the response from the market was lukewarm. That said, the company expects the demand to revive once again. Part of the reason why it believes so is the aim of the government to encourage the use of alternative fuel-based vehicles given the rising prices of oil. In the Budget for 2011-12, the Finance Minister proposed to set up a National Mission for Hybrid and Electric Vehicles to encourage manufacturing and selling such vehicles. However, it remains to be seen whether demand indeed does pick up.

It must be noted that in the December quarter, motorcycles sales volumes for TVS formed nearly 41% of the total volumes and grew by 40% YoY. Sales of scooters on the other hand, grew at a faster pace of 63% YoY and contributed to nearly 24% of total sales volumes during the quarter.