Small and mid caps in favour today

Tue, 23 Sep 11:30 am

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After opening flat, Indian Indices have remained below the dotted line in the morning trading session. Majority of sectoral indices are trading weak with realty and metal stocks being the leading losers in the pack. Only stocks from consumer durables and software sectors are trading in green today.

The BSE-Sensex is trading down 67 points. The NSE-Nifty is trading down 22 points. However, the midcap and small cap stocks are in favour today. The BSE Mid Cap index is trading up 0.10% and the BSE Small Cap index is trading up 0.17%. The rupee is trading at 60.78 to the US dollar.

Most telecom stocks are trading lower today. Reliance Communication and Bharti Airtel are among the stocks leading the losers. As per a financial daily, the telecom regulator TRAI has criticised the M&A norms in the sector. TRAI Chairman Rahul Khullar has said that the norms issued by the Department of Telecom (DoT) six months ago, were a non-starter and would not encourage consolidation in the sector. Since the new rules came into effect, there has been no M&A in the sector. The key hurdle is the contentious clause that requires the buyer to pay full market price for the spectrum that the seller possesses. This will certainly raise the cost of acquisition. The DoT has yet to come out with its final decision on the issue.

MNC pharma stocks are trading in green, with Sanofi India and GSK pharma are in demand. While Indian pharma companies are trading mixed with Torrent pharma and Piramal being the leading gainers in the pack. Dishman and JB chemicals are facing selling pressures. As per the financial daily, the national pricing pharmaceutical authority (NPPA) of India, has withdrawn the price control order on 108 drugs. Some time back, NPPA's order had broadened the scope of price control even to drugs outside of the National list of essential medicines (NLEM). The order was to cap prices of a list of 108 cardiovascular and diabetes drugs, not part of NLEM. This had created uproar from the industry, which also led to several lawsuits filing contesting the order of reducing the prices. However now the authorities have decided to withdraw this order and hence the notification given during the July 2014 order ceases to be valid. Among the various companies, Sanofi India had large part of its portfolio exposed in cardiac and diabetes therapies and was expected to get impacted the most. Among the other pharma companies viz; Abbott India, Cipla, Sun pharma, Ranbaxy, Lupin were also expected to get impacted on the back of this event. This new order of withdrawal will be a big relief for the pharma players, especially for Sanofi whose revenues were expected to get impacted the most.