Strong buying bolsters Indian markets

Fri, 9 Jul Closing

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Indian markets traded well above the dotted line for the entire trading session today on the back of sustained buying activity across index heavyweights. While the BSE Sensex closed higher by around 182 points (up 1%), the NSE Nifty gained around 56 points (up 1%). Midcap and smallcap stocks also did well as the BSE Midcap and BSE Smallcap notched gains of 1% and 0.4% respectively. Gains were largely seen in metals, auto and banking stocks.

As regards global markets, Asian indices closed firm today while most European indices have also opened in the green. The rupee was trading at Rs 46.78 to the dollar at the time of writing.

Auto stocks closed firm today with the key gainers being TVS Motor, M&M and Tata Motors. As per a leading business daily, passenger vehicles will not be able to sustain the high growth (witnessed over the last six months) in FY11. In the last 6 months, the average growth in the Indian passenger vehicle industry stood at 30%. In FY11, the industry is expected to clock a growth of 12-13% as forecasted by the Society of Indian Automobile Manufacturers (SIAM).

The reasons for the same are not hard to find. In the last few months, the industry benefitted from the relaxed monetary policies, benign commodity prices and robust demand. However, with the imminent hike in interest rates and rising commodity prices, replicating this kind of growth would be a tad difficult. Prices of vehicles could also rise when the Bharat Stage III norm is implemented across the country by October. Meanwhile, two-wheeler sales are expected to grow by 9-10%, while commercial vehicle sales are expected to clock a growth of 17-18%.

Pharma stocks closed mixed today. While Piramal Healthcare and Ranbaxy found favour, Sun Pharma and Cipla closed in the red. As per a leading business daily, Lupin has become one of the top five generic drug companies operating in the US market in terms of number of prescriptions. Lupin now trails behind Teva, Mylan, Sandoz and Watson. Lupin had an average of a little over 8.4 m prescriptions a month in the year between May 2009 and April 2010 according to the global market research agency IMS.

Lupin has made rapid strides in the US on account of its branded generics strategy. Infact, in FY10, formulation sales from the US registered a robust 39% YoY growth. The branded generics business there grew by a dazzling 72% YoY and this business now accounts for 37% of the overall sales in the US. What is more, with the acquisition of 'AllerNaze' (an intra-nasal steroid) and 'Antara' (an anti-cholesterol drug), Lupin has further strengthened its US product portfolio. The stock closed flat.

India is now the hottest flavor in town for the West. And one need look no further than the International Monetary Fund (IMF), which has raised India's growth forecast for 2010 to 9.5%. About 3 months back, its estimate was 8.8%. The IMF has upped its forecast based on positive corporate results and financial conditions. In fact, the IMF has upped global growth projections upwards to 4.5% in 2010 on the basis of strong performance by Asian countries. Of course, Asian countries do have their own set of challenges to address. But given the kind of problems that are plaguing the West, it now seems that the sun is firmly shining in the East.