Volatility impacts Indian indices

Mon, 15 Mar Closing

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It was a highly volatile trading session on the bourses today. While markets traded in the red in the morning session, strong buying activity in the ensuing hours pushed the indices above the dotted line. Since then they oscillated to either side of yesterday's close before closing marginally into the red. While the BSE Sensex closed lower by around 2 points, the NSE Nifty lost around 8 points. Midcap and small cap stocks were not spared either as they lost around 1% each. Losses were largely seen in capital goods and banking stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened on a weak note. The rupee was trading at Rs 45.64 to the dollar at the time of writing.

Engineering stocks closed weak today and the major losers here included Suzlon, ABB, Voltas and L&T. As per a leading business daily, engineering major L&T has bagged a Rs 20.4 bn order from the state run Mangalore Petrochemicals. The latter is a unit of ONGC. The scope of the contract includes setting up a new complex which will manufacture aromatic products like paraxylene and benzene at the Mangalore Special Economic Zone in Karnataka. The project is likely to be the country's single largest paraxylene unit and is expected to be ready for commissioning by December 2012. While this is a positive for L&T and will enable it to enhance sales in the long term, execution is the key. Infact, the company's overall sales were impacted in 3QFY10 as execution of various projects went through rough patches during the quarter leading to consequent delays.

As per reports, Ranbaxy has entered into a patent settlement agreement with the Japanese company Takeda Pharmaceuticals for the latter's anti-diabetic drug 'Actos' in the US. 'Actos' generated sales to the tune of US$ 3.4 bn for the twelve months ended December 2009. Under terms of the agreement, Ranbaxy has certainty in the launch of its generic equivalent formulation of 'Actos' on August 17, 2012, or earlier under certain circumstances. This is a positive for Ranbaxy as there is certainty with respect to the revenues that it garners for its Para IV filings. This has been amply demonstrated by the settlements that it has reached for the blockbuster drugs 'Imitrex', 'Valtrex', 'Flomax' and 'Lipitor'. At the same time, the company needs to resolve its issues with the US FDA soon if it wants to enjoy the full benefits of the exclusivity window for these products. The stock closed 1% higher.

The WPI numbers for February are out and they do not paint a rosy picture. India's wholesale inflation rose 9.89% in February from a year earlier largely fuelled by firm food prices. However, the chief economic advisor in the Finance Ministry is of the view that the rise in inflation is likely to continue for another month after which it should start toning down. The food articles index rose an annual 17.79% in February, while the manufacturing products index in the WPI rose an annual 7.42% in the same month. This certainly puts pressure on the RBI to raise interest rates. Therefore, all eyes will be on the central bank when it meets for its policy in April.