Indian Markets Extend Losses

Mon, 2 Nov 11:30 am

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After opening the day on a bearish note, the Indian Indices extended their losses and are presently trading lower. Most of the sectoral indices are trading on a discouraging note with capital goods and pharmaceuticals sector leading the losers.

The BSE-Sensex is trading lower 187 points (down 0.7%) and the NSE-Nifty is trading down 53 points (down 0.7%). The S&P BSE Midcap index and the S&P BSE Smallcap index are also trading negatively, down by 0.4% and 0.5% respectively. The rupee is trading at 65.47 to the US$.

As per an article in Economic Times, Sun Pharma is expecting its revenues and net profit to be adversely hit in the short term. This was estimated by keeping in mind the supply constrains at Halol facility in Gujarat and high expenses arising out of Ranbaxy integration as well as remedial actions.

The company may also discontinue some of its non-strategic businesses as a part of the integration process with Ranbaxy Laboratories. The company, at its 23rd Annual General Meeting (AGM), said that it is expecting to incur certain integration charges in order to generate long-term synergies form the merger with Ranbaxy.

Sun Pharma had acquired Ranbaxy Laboratories in a US$ 4 billion deal last year. The company is eyeing synergy benefits of US$ 300 million from this merger by 2017-18.

Currently, all the four manufacturing facilities of Ranbaxy - Mohali and Toansa in Punjab, Dewas in Madhya Pradesh and Paonta Sahib in Himachal Pradesh - have been banned by the USFDA from export of drugs to the US market. Sun Pharma has stated that the remediation process at these four manufacturing sites continues to move as per the plans. However, it cautioned that this would be a time consuming process.

The scrip of Sun Pharma is trading down about 1.8%.

Stocks in the automobile space are trading on a mixed note with Bajaj Auto and Ashok Leyland leading the losses. As per a leading financial daily, Mahindra & Mahindra (M&M) has reported 20% surge in total sales for the month of October on a YoY basis. This was mainly because of good demand for its recently launched TUV300.

Domestic sales were up by 21% YoY while the exports were up by 3% YoY during the month. Sales of passenger vehicles during the month stood at 24,060 units, a 19% YoY increase. This included Scorpio, XUV 500, Xylo, Bolero and Verito. Commercial vehicles sales increased 31% YoY to 18,756 units.

The company is expecting that the industry will maintain a good growth momentum going forward with the drop in interest rates and fuel prices remaining gentle.

The auto industry, at present, is witnessing a fillip on the back of the festive season. Also the new launches by various auto majors, which have received an encouraging response, have aided this boost.

Presently, the stock of Mahindra & Mahindra (M&M) is trading up by 3.2%.