Sensex Opens Flat; Banking and Realty Stocks Gain

Fri, 7 Jun 09:30 am

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Asian share markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.5% and the Hang Seng rose 0.2%. The Shanghai Composite lost 1.2%. Wall Street's main indices closed higher after a choppy session on Thursday as investors grew more optimistic on trade after reports that the United States is considering a delay in imposing tariffs on Mexican imports.

Back home, India share markets opened on a flat note. The BSE Sensex is trading up by 36 points while the NSE Nifty is trading down by 4 points. The BSE Mid Cap index and BSE Small Cap index opened up by 0.1% and 0.2% respectively.

Sectoral indices have opened the day on a mixed note with realty stocks and bank stocks leading the gainers. Oil & gas stocks and telecom stocks have opened the day in red.

The rupee is currently trading at 69.19 against the US$.

On Thursday, the Indian rupee recouped most of its early losses and closed marginally lower at 69.28 to the US dollar after the Reserve Bank in a widely expected move cut key interest rates by 0.25 percentage point.

To boost the sagging economy, the RBI June 6 lowered its benchmark lending rate to a nearly nine-year low of 5.75% and changed its monetary policy stance to accommodative, leaving space for future rate cuts.

After opening on a weak note at 69.41 at the interbank forex market, the Indian unit fell further to 69.45 against the US currency.

Following the RBI's Monetary Policy Committee (MPC) decision, the local currency recovered most of the lost ground and settled for the day at 69.28, down 2 paise over its previous close.

The rupee had settled at 69.26 against the US dollar Tuesday.

Reportedly, foreign fund outflows and rising crude oil prices also kept pressure on the Indian rupee. Moreover, heavy selling in domestic equities also weighed on the local unit.

Foreign funds pulled out Rs 4.2 billion in the capital markets on a net basis Tuesday.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.04% to 97.28.

Meanwhile, the 10-year government bond yield was at 6.9% on Thursday.

With the expectation of a rate cut on Thursday, the yield on the 10-year government bond yield closed below 7% for the first time since November 2017.

Bond Yields Falls Below 7%

Besides expectations of a rate cut, other factors such as a decline in crude oil prices, fears of weaker global growth, and a fall in global bond yields impacted domestic bond yields.

A fall in yields would benefit the banking sector.

A reduction in the interest rate creates a conducive environment for lending. This would help to revive demand and growth in the economy.

Also, from the banks' perspective, a fall in yields would help to increase investment income on its bond portfolio. This would reflect in their quarterly earnings. This is because bond yields and bond prices move in opposite directions.

Now, how this pans out going forward remains to be seen.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Alembic Pharmaceuticals has received approval from the US health regulator for Carbidopa and Levodopa extended-release tablets.

These tablets are used for treatment of Parkinson's disease.

The approved products are therapeutically equivalent to the reference listed drug Sinemet CR tablets of Merck Sharp & Dohme Corp.

The company has received approval from the US Food and Drug Administration (USFDA) for its abbreviated new drug application Carbidopa and Levodopa extended-release tablets in the strengths of 2.5 mg/100 mg and 50mg/200 mg.

Quoting IQVIA sales data, the company said the two products had an estimated market size of US$ 24 million for 12 months ended December 2018.

The company said it now has a total of 94 abbreviated new drug application (ANDA) approvals from the USFDA.

Alembic Pharma share price opened the day up by 0.7%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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