Late selling takes toll

Mon, 20 May Closing

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   09:30 am   

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Indian equity markets began the day's proceedings on a cautious note but notched gains as the hours progressed on the back of buying momentum across index heavyweights. While the morning session saw them trading firm albeit within a range, selling activity intensified in the later hours pushing the indices into the red as investors chose to book profits at higher levels. While the BSE-Sensex today closed lower by 62 points, the NSE-Nifty closed lower by 30 points. Both the BSE Mid Cap index and the BSE Small Cap were not spared either and closed marginally lower. Losses were largely seen in pharma and consumer durables 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 54.99 to the dollar at the time of writing.

MNC pharma stocks closed mixed today. While Pfizer India and Sanofi india found favour, GSK Pharma and Abbott India closed into the red. As per a leading business daily, the new drug price control policy will shift towards market-based price control model as per which the prices of the drugs will be fixed at the simple average price of brands that have more than 1% market share. Further, according to the Drug Price Control Order (DPCO) 2013, 348 medicines in the National List of Essential Medicines (NLEM) have been brought under price control. As per the 1995 policy, only 74 bulk drugs were under price control. This is bound to have some impact on the profitability of pharma companies in India. MNC pharma companies will certainly get impacted more than their domestic counterparts. For starters, most MNC pharma medicines tend to be priced at a premium and this will now have to come down. Secondly, MNC pharma companies are entirely focused on the domestic market. Whereas for Indian pharma companies, the Indian market forms only one chunk of the total revenue pie. They have considerable revenues coming from the exports markets as well.

Sintex Industries announced results for the fourth quarter and year ended March 2013. Consolidated total income increased 36.9% YoY during 4QFY13, while for the full year, this stood at 14.7% YoY. Strong growth from prefabricated building systems (up 35% YoY), domestic custom molding business (up 29% YoY) and tanks (up 21% YoY) drove topline growth. However, revenues from monolithic construction were down by 8% YoY. Operating profits increased 18.1% YoY, in line with healthy top line growth. However, operating margins were down by 210 bps to 13.5% during the quarter. For the full year, operating margins were down by 100 bps and stood at 15.1%. Net profits increased 65.5% YoY due to sharp rise in other income (up 294.5% YoY) and strong performance at the operating level. However, adjusting for exchange gains/losses profits increased 79.1% YoY. The stock closed marginally higher today.