Markets tank on Bernanke announcement

Thu, 20 Jun 09:30 am

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All the Asian stock markets have opened the day on a weak note following announcement by US Federal Reserve Chairman Ben Bernanke about plans to pull back the quantitative easing program. Stock markets in Indonesia (down 2.9%), Hong Kong (down 2.4%) and Singapore (down 1.9%) leading the pack of losers. The Indian equity markets indices have also opened the day on a weak note. Stocks in the realty, banking and metal space are leading the losses.

The Sensex today is down by around 391 points (2%), while the NSE-Nifty is down by around 124 point (2.1%). Mid and small cap stocks are also trading in the red with the BSE Mid Cap and BSE Small Cap indices down by around 1.3% and 1% respectively. The rupee is trading at Rs 58.70 to the US dollar.

Indian pharma stocks have opened the day on a mixed note with Fresenius Kabi Oncology, Panacea Biotech and Orchid Chemicals leading the losses. As per a leading daily, European Union antitrust regulators have imposed fines amounting Rs 146 m Euros (approximately Rs 11.5 bn) on nine global drug manufacturers. The reason for the penalty is that these nine companies have been held guilty of blocking the supply of cheaper versions of Danish company Lundbeck's antidepressant drug citalopram. Indian pharma company Ranbaxy Laboratories is among the companies who have been fined. The company is required to pay a penalty of Rs 10.3 m Euros (approximately Rs 800 m). As per the daily, the company is expected to appeal against the decision.

As per the European Commission, Lundbeck had inked agreements with the other eight global drug makers to delay the entry of cheaper generic versions of its blockbuster citalopram. This had resulted in consumers paying 20% more for the medicines.

Information technology stocks have opened the day on a weak note with NIIT Ltd, Moser-Baer India and HCL Infosystems leading the losses. As per a leading financial daily, India's third largest software exporter Wipro Ltd is said to have bagged a large information technology (IT) outsourcing contract worth about US$ 500 m ( approximately Rs 29.4 bn) from US-based financial services company Citigroup. Wipro will be responsible for application development and maintenance and for providing infrastructure management services for Citigroup's global operations. As a part of the contract, Wipro will also be required to set up a large offshore delivery centre in Bangalore to provide services exclusively to Citigroup. The tenure of the contract is five years. It must be noted that Citigroup is an existing client of Wipro. However, most of its IT outsourcing services are delivered by Tata Consultancy Services Ltd (TCS).