Losers by far outnumber gainers

Fri, 21 May 01:30 pm

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Although having recovered from the morning losses during the previous two hours of trade, the Indian markets are trading well below yesterday’s closing levels. The overall market sentiment continues to remain negative as the decline to advance ratio is poised at 3.7 to 1 on the BSE. Stocks from the realty, metal and power sectors are currently amongst the top losers.

BSE-Sensex is trading lower by 200 points while NSE-Nifty is trading 55 points below the dotted line. The BSE-Midcap and BSE-Smallcap indices are trading lower by 1.75% each. The rupee is trading at 47.01 to the US dollar.

Telecom stocks are currently trading weak led by Idea Cellular, Reliance Communications and MTNL. Following the completion of the 3G spectrum auction process, the telecom Regulatory Authority of India (TRAI) has now made a statement that it is planning to come out with recommendations on the next level of services, fourth generation (4G) technology or ultra-broadband. It plans to come out with recommendations on the same by the end of the year. As per the chairman of TRAI, the regulator plans to bring out a consultation paper on 4G in the next two-three months. The successor to the 2G and 3G technology, 4G technology offers download at much faster speed and high definition video on demand, among other services.

In another development, it is reported that the communications ministry has asked telecom operators to implement mobile number portability (MNP), a service that allows a customer to shift their network without changing his number, by September this year. If implemented on time, MNP could be a big game changer for the telecom industry. This is especially after considering that the 3G auction have just ended and 3G services are likely to be launched by the end of the year.

Healthcare stocks are currently trading weak led by Wockhardt, Piramal Healthcare and Ranbaxy. As per a press release, US based Abbott will acquire Piramal Healthcare’s domestic formulation business for US$ 3.7 bn. This will involve US$ 2.1 bn payment upfront and US$ 400 m payment annually for the next four years. Under this deal, Piramal will transfer its domestic formulation business including manufacturing, marketing and selling of branded generic pharmaceutical products in India, Nepal and Sri Lanka. It will also be transferring its manufacturing facility at Baddi and marketing rights for over 350 brands and trademarks to Abbott.

As such, Piramal will be retaining its other business - custom manufacturing for third party, critical care, OTC products, manufacture and supply of active pharmaceutical ingredients, vitamins and fine chemicals, diagnostic medical devices and equipment and diagnostic and clinical research services. Piramal would also be able to continue its novel drug discovery and research. With this acquisition, Abbott will be able to accelerate its growth in emerging markets. The company expects that the combined sales force would be the largest in the pharma industry in India, and forecast sales of more than US$ 2.5 bn by 2020.