A volatile day of trading

Mon, 14 Oct Closing

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Indian equity markets had a volatile trading session today. Although well above the dotted line, alternate bouts of buying and selling throughout today's session largely restricted movement within a range. While the BSE-Sensex today closed higher by 79 points, the NSE-Nifty closed higher by 17 points. The BSE Mid Cap and the BSE Mid Cap did better and gained around 1% each. While auto and banking stocks closed firm, FMCG and metals stocks were at the receiving end.

As regards global markets, Asian indices closed mixed today while European indices have also opened mixed. The rupee was trading at Rs 61.24 to the dollar at the time of writing.

Energy stocks closed mixed today. While Gujarat Gas and Oil and Natural Gas Corporation Ltd. (ONGC) found favour, Gas Authority of India Ltd (GAIL) and Indraprastha Gas closed into the red. As per a leading business daily, Oil and Natural Gas Corporation's (ONGC) overseas arm ONGC Videsh intends to buy an additional 12% stake in a Brazilian oil block from Petrobras for US$ 529 m. Both ONGC Videsh and Shell had served a pre-emption notice to jointly acquire the 35% stake. Shell is the operator of the block with a 50% stake, while ONGC already owns 15% of the block. Earlier, Petrobras was looking to sell its 35% stake in the oil block to China's Sinochem Group. But the deal was subject to the pre-emption rights of both Shell and ONGC Videsh. It must be noted that India imports around 70% of the oil that it consumes. In recent times, the steep depreciation of the rupee has wreaked havoc as the value of oil payments has risen putting further pressure on the current account balance. Hence, it has become important for the country to become self reliant as far as energy is concerned and acquiring stakes in oil fields abroad is one such step that the oil sector has been undertaking.

Wockhardt seems to be at the receiving end once again. As per a leading business daily, the UK's health regulator has withdrawn the good manufacturing certification of the company's Chikalthana facility in Maharashtra. This facility contributed approximately GBP 12 m from the UK and EU markets to the consolidated annual revenues of the company. This plant manufactured both injectables and solid dosages. It must be noted that the US FDA had also imposed an import alert on the same plant in May this year as a result of which sales in the US are also expected to be adversely impacted. The US FDA in recent times has become quite strict with respect to compliance with good manufacturing practices (GMP). In this regard, it has also been conducting surprise checks on plants. Subsequently, quite a few plants of Indian pharma companies have come under the US FDA scanner with the worst hit being Ranbaxy. The stock of Wockhardt closed lower by 5% today.