Metal, realty stocks see most pressure

Tue, 4 May 01:30 pm

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Selling pressure led the Indian markets to shed their morning losses and drift into the negative territory during the previous two hours of trade. The market breadth is negative as the overall decline to advance ratio is poised at 1.2 to 1 on the BSE. While stocks from the healthcare, oil & gas and auto spaces are holding up, those from the other sectors are seeing some pressure. Those leading the pack of losers include metal, realty and FMCG.

The BSE-Sensex is trading lower by about 45 points, while the NSE-Nifty is trading lower by about 10 points. While stocks from the midcap space are seeing some pressure, those from the smallcap space have managed to garner the investors' interest as the BSE-Smallcap Index is currently trading marginally up. The BSE-Midcap Index is down by about 0.4%. The rupee is trading at 44.6 to the US dollar.

Healthcare stocks are currently trading firm led by Panacea Biotec, Piramal Healthcare and Glenmark Pharmaceuticals. Glenmark Generics, a unit of Glenmark Pharmaceuticals has gotten into a licensing agreement with a unit of US based Par Pharmaceutical Companies Inc. This agreement is to market 'Ezetimibe' tablets, which are a generic version of Merck-Schering Plough's 'Zetia' tablets. Zetia is a cholesterol-modifying agent and whose annual sales have been pegged at US$ 1.4 bn. This is a strong benefit for the company as it is reportedly the first company to file for a paragraph-IV certification for the product. As such, this could possibly allow it to get a 180-day exclusivity of exclusive marketing rights for the product. As part of the agreement, both the companies will share profits from sales of the product. As per the company, it is currently involved in a patent litigation concerning this tablet in a US district court. At the same time it must be noted that Glenmark had received a tentative US FDA (food and drug administration) approval for 'Ezetimibe' tablets in April 2009. Given that the US generics market is highly competitive, receiving exclusivity window for products would certainly enhance revenues and profits going forward.

Media stocks are currently trading weak led by Zee Entertainment, Deccan Chronicle and TV18. Balaji Telefilms announced its results recently. The company reported a 15% YoY decline in revenues during the quarter. This was seemingly on the back of a fall in both hours of programming and average realisations per hour. However, at the operating level, the company was able to improve its performance. While staff cost increased by 7% (as a percentage of sales), production and telecast costs decreased by 30% (as a percentage of sales). During the corresponding quarter last year, Balaji recorded a loss at the operating level. Higher other income and lower depreciation costs helped the company improve its position at the profit before tax level. However, higher tax outgo reduced its profits during the quarter. During the full year FY10, the company's revenues and profits declined by 45% YoY and 42% YoY respectively. Operating margins during the year stood at 6.5% as against 14.6% last year.