Sensex Opens Flat; DHFL Gains Over 3%

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Asian share markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.3% while the Hang Seng is up 0.1%. The Shanghai Composite is trading down by 0.1%. US stocks rose on Wednesday, with each of the major indices closing at a record high, as expectations grew that the Federal Reserve would take a more dovish turn as a raft of data provided more evidence of a slowing economy.

Back home, India share markets opened the day on a flat note with positive bias. The BSE Sensex is trading up by 55 points while the NSE Nifty is trading up by 22 points. Both, the BSE Mid Cap index and BSE Small Cap index opened up by 0.2%.

Sectoral indices have opened the day on a mixed note with consumer durables stocks and metal stocks leading the losers. Oil & gas stocks and banking stocks have opened the day in green.

The rupee is currently trading at 68.86 against the US$.

In the news from the NBFC sector. As per an article in a leading financial daily, India will soon give Reserve Bank of India (RBI) power to regulate housing finance companies (HFCs), which will almost certainly lead to the lenders facing stringent asset quality reviews.

That could have major repercussions for about 80 HFCs, the largest of which include Indiabulls Housing Finance Ltd, Housing Development Finance Corporation and Dewan Housing Finance Corporation, leading to them facing unprecedented scrutiny and the potential for major financial penalties and restriction on their activities if improper practices are discovered.

In late 2015, the RBI started a similar review of bank assets amid allegations that lenders were hiding the extent of the bad debts on their books.

During multiple asset quality reviews of banks, the RBI revealed a plethora of areas where lenders were under reporting their bad loans.

It initially led to financial penalties for some lenders and eventually fed into decisions to impose tougher restrictions on their loan books while their bad debts remained high.

The housing finance companies, which are part of the broader shadow banking sector known as non-banking finance companies (NBFCs), are currently regulated by the National Housing Board, and the central bank has no direct authority over them.

The other NBFCs are very loosely regulated, with various regulators including the RBI having some role but no one being fully accountable.

The RBI's oversight of HFCs will be a step towards the Indian authorities getting a firmer grip on the risky shadow banking sector that will help to contain any systemic problems.

A series of debt defaults last year by major infrastructure financing group, Infrastructure Leasing and Financial Services (IL&FS), showed that much of the sector was highly leveraged.

On Monday, Finance Minister Nirmala Sitharaman said the government was considering giving more powers to the central bank to regulate the struggling shadow banking sector, though she was not specific.

Both the government and RBI have declined to provide direct financial support to financially troubled NBFCs so far. But having regulatory powers over the HFCs might make it easier for the RBI to open credit lines for these firms if necessary, the reports noted.

As credit rating firms have downgraded the ratings of some of the housing finance companies it has stoked credit-risk fears and hurt their ability to raise funds for more lending.

That in turn has made it difficult for consumers and small businesses to get loans and hurt car and motorbike sales, among other things.

Moving on to the news from the pharma sector. As per an article in a leading financial daily, Zydus Cadila has received final approval from US Food & Drug Administration (USFDA) to market Misoprostol Tablets 100 mcg and 200 mcg.

Misoprostol is used to prevent stomach ulcers in patients taking pain medications especially if the patient is at risk for developing ulcers or has a past history of ulcers. Tablet also helps to decrease risk of serious ulcer complications such as bleeding.

The drug will be manufactured at the group's formulations manufacturing facility at SEZ, Ahmedabad.

The group now has 268 approvals and has so far filed over 360 ANDAs since the commencement of the filing process in FY 2003-04.

Meanwhile, Dr. Reddy's Laboratories has launched Carboprost Tromethamine Injection USP, 250 mcg/mL (1mL) Single-dose Vial, a therapeutic equivalent generic version of Hemabate injection, approved by the USFDA.

The injection had US sales of approximately US$55 million MAT for the most recent twelve months ending in April 2019 according to IQVIA Health.

Dr. Reddy's Lab share price opened up by 0.8%.

Here's an interesting data on Dr. Reddy's Lab, investing just Rs 100,000 in Dr. Reddy's Labs in 1992, it would have given a whopping Rs 4.89 crores in 2014!

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