Markets maintain the momentum

Wed, 26 Mar Closing

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Maintaining the buoyancy, Indian equity markets continued to gain momentum in the afternoon trading session. Backed by foreign institutional buying and gains in Asian stocks, the Indian benchmark indices closed the day on a positive note. Stocks from sectors such as capital goods and metals posted healthy gains today. However, the BSE Small Cap index was down by 0.07% and the BSE Mid Cap index was seen up by 0.4% respectively. The BSE Sensex closed higher by 40 points and the NSE-Nifty was up by 12 points.

On the global front, most of the Asian indices closed the day on an optimistic note and most of the European indices too opened the day on a firm note. The rupee was trading at Rs 60.13 to the dollar at the time of writing.

Barring few such as Strides Arcolab, Cadila Healthcare and Piramal Enterprises, stocks from the Indian Pharma sector closed the day on a weak note. Stocks such as Indoco Remedies and Glenmark Pharma led the pack of losers today.

As per a leading financial daily, India's generic drug manufacturers are under scrutiny once again. The Regulator has emphasized upon quality over price. It is believed that the recent regulatory warnings are expected to attach a new premium on manufacturers who would demonstrate strong quality over time and contain supply disruptions. Few Indian pharmaceutical companies have already faced setbacks. Ranbaxy laboratories had faced imports ban from all the Indian plants by FDA. This was due to constant production quality lapses. Also, the US health regulator had banned medicines made at one of the plants of Sun Pharmaceuticals Industries Ltd. Even Dr Redyy's Laboratories Ltd and Wockhardt Ltd have been involved in recent major product recalls. Therefore, such regulatory warnings for Indian pharmaceutical industry will add a new emphasis on quality of medicines.

Barring Indian Bank and United Bank of India, stocks from the PSU banks sector closed the day on a firm note with Bank of Maharashtra and Bank of Baroda leading the pack of gainers. As per a leading business daily, the consortium of lenders led by State Bank of India (SBI) is expected to declare ailing Kingfisher Airlines (KFA) a willful defaulter. Once the audit report from Ernst and Young confirms misallocation of funds by KFA, then the banks forming part of consortium would declare it as a willful defaulter. SBI has already provided fully for the KFA exposure. Of the total consortium lending of Rs 70 bn, banks have been able to recover merely 6 bn through sale of pledged shares. While the recovery efforts are still underway, the banks are currently battling 14 cases against KFA in various debt recovery tribunals. Besides SBI, Bank of Baroda, Indian Overseas Bank and Punjab National Bank were part of the consortium lending to KFA.