Late buying fuels Indian indices

Thu, 11 Apr Closing

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Indian equity markets began the day's proceedings on a positive note but trading remained largely rangebound in the morning session. However, the later hours saw buying intensify across index heavyweights resulting in the indices closing well above the dotted line. While the BSE-Sensex closed higher by 127 points, the NSE-Nifty closed higher by 35 points. The BSE Mid Cap closed marginally higher while the BSE Small Cap closed higher by 1%. Gains were largely seen in banking and IT stocks.

As regards global markets, most Asian indices closed in the green today while European indices have also opened firm. The rupee was trading at Rs 54.53 to the dollar at the time of writing.

Auto stocks closed mixed today. While Tata Motors and Maruti Suzuki found favour, Hero Motocorp and M&M closed into the red. As per a leading business daily, Mahindra & Mahindra (M&M) has reported disruptions at its plant at Igatpuri as workers have resorted to a tool down strike. The Igatpuri plant of M&M manufactures engines for the utility vehicles. According to the company, engine inventory at the plant is around 3-4 weeks, while that of utility vehicles is also around the same. The incidence of labour unrest has increased in recent times. First was the strike and violence at Maruti's plant at Manesar. The other company to face the heat was Hero Motocorp whose workers have been demanding better salaries and benefits. While the management of these companies will not concede to all demands, some compromise may be reached to resolve the issue. Thus, a general rise in wages across the industry cannot be entirely ruled out.

Pharma stocks also closed mixed today. While Ranbaxy and Sun Pharma closed firm, Dr.Reddy's and Cadila Healthcare closed weak. As per a leading business daily, niche segments will be the key to growth for domestic pharma players both in the Indian and global markets. The Indian pharma market has been highly competitive and the new drug pricing policy if introduced is likely to put pressure on the performance of companies. Thus, those focusing on niche segments such as combined dosages, novel drug delivery areas, in-licensing with innovators, over-the-counter (OTC) business and capturing growth in tier II and III cities will have the edge. Same is the case in the regulated markets such as the US. The US generics market has potential as drugs worth US$ 80 bn are expected to lose patents over the next 4-5 years. However, competition in this market has significantly intensified as a result of which price erosion has also been severe. That is why pharma companies have been focusing on products which are either difficult to manufacture or are low competition so that the potential to earn revenues and profits is higher.