Late buying fuels Indian indices

Mon, 13 Aug Closing

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Indian equity markets had a volatile trading session for a larger part of the day today. The indices began the day's proceedings on a cautious note and oscillated to either side of Friday's close till late afternoon. However, in the final few hours, buying activity surged ensuring that the indices closed well above the dotted line. While the Sensex today closed higher by 76 points, the NSE-Nifty today closed higher by 28 points. The BSE Mid Cap and the BSE Small Cap also did well to notch gains of 0.5% each. Gains were largely seen in consumer durables and Oil and gas stocks.

As regards global markets, Asian indices closed mixed today while European indices have also opened mixed. The rupee was trading at Rs 55.41 to the dollar at the time of writing.

Pharma stocks closed mixed today. While Ranbaxy and Sun Pharma found favour, Dr. Reddy's closed into the red. As per a leading business daily, pharma major Ranbaxy is looking to ramp up production at its plant in Mohali. Part of the strategy is to shift the production of Atorvastatin (brand name Lipitor) from its US facility to India. It must be noted that Lipitor was the largest selling drug in the US market before its patent expiry and post that Ranbaxy capitalised on the 180-day exclusivity that it had received earlier for this drug. The company managed to rake in around US$ 600 m from Atorvastatin in the US market during the 6 months. Ranbaxy also has plans to launch the generic version of Novartis' US$ 6 bn hypertension drug Diovan from the Mohali plant. For this too, the company enjoys 180-day exclusivity. Given that the core business has been facing some pressure, these new launches will be the key drivers for Ranbaxy's growth going forward. Also, although Ranbaxy had signed a consent decree earlier this year with the US authorities, it could be a while before it can resume supplying medicines to the US from the Poanta Sahib and Dewas plants.

Bharat Forge announced results for the first quarter ended June 2012. Bharat Forge's revenues increased by 9% YoY during the quarter ended June 2012. Forming nearly 53% of total revenues (47% during 1QFY12), export revenues led the growth in this quarter with a 31% YoY increase. Domestic revenues, on the other hand, declined by 8% YoY. As per the management, the decline in production of M&HCVs was the reason for the same. Export revenues were driven by strong CV sales in the US, coupled with the rupee depreciation as well as focus on the non-auto business. Bharat Forge's operating profits rose at a faster pace of 13% YoY as margins expanded by 0.8% to 25.1%. The margin expansion was largely due to lower input costs (as a percentage of sales). Bharat Forge's profits increased by 8% YoY led by a stable performance at the operating level. However, the 76% YoY increase in depreciation charges brought the profit growth lower as compared to the 13% YoY increase in operating profits. The stock closed lower today.