Markets close on a weak note

Wed, 4 Nov Closing

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Profit booking during the last few hours of trade led the Indian markets to slide just below the dotted line. The BSE-Sensex ended the day lower by about 38 points, while the NSE-Nifty closed lower by about 21 points. Stocks from the auto and metal spaces were amongst the top performers today, while those from the healthcare and IT spaces led the pack of underperformers. BSE Small Cap too closed on a weak note (down 0.3%), while BSE Mid cap managed to finish in green (up 0.2%).

Asian markets closed sharply higher today with shares in China leading the region. The Shanghai Composite was up 4.31%, while Hong Kong's Hang Seng was up 2.15% and Japan's Nikkei 225 was up 1.3%. European markets are trading higher today with shares in France leading the region. The CAC 40 is up 0.91%, while London's FTSE 100 is up 0.88% and, Germany's DAX is up 0.22%. The rupee was trading weak at 65.57 against the US$ in the afternoon session.

According to a leading financial daily, Dr Reddy's Laboratories has entered into a strategic alliance with Biocodex to market and distribute Biocodex products in the Romanian market. Dr Reddy's has been given the complete rights for promotion and distribution of the Biocodex products across Romania. Biocodex announced the change in partnership effective from October 1, 2015.

With this new collaboration coming into existence, Dr Reddy's will aim to improve the access for Romanian patients to the Rx portfolio including Biocodex's well-known OTC products ENTEROL and OTIPAX.

Shares of Dr. Reddy's Laboratories finished the day on a negative note on the BSE.

The emerging markets are very important growth drivers for pharma companies in an environment where the regulatory challenges in the all important US market have only increased. Indeed, the compliance challenges for pharma companies never seem to end. The companies are already struggling to get USFDA approvals, and they now face yet another regulatory challenge: revocation of approved or tentatively approved ANDAs (abbreviated new drug approvals). The USFDA can cancel an approved drug if the plant where the drug is filed does not completely fulfill the compliance norms. In one of our recent premium editions of the '5 Minute WrapUp', Bhavita Nagrani, our pharma analyst, has given a bit more colour on the compliance issues faced by major Indian pharma companies.

Shares of Nestle India finished on an optimistic note (up 0.4%) in today's trading session after it was reported that the company would resume production and sales of Maggie this month after NABL, an accredited laboratory, cleared the samples of the newly-manufactured noodles. The Bombay High Court had mandated the lab to conduct a sample test on the noodles.

Reportedly, the company is already engaging with the authorities in Himachal Pradesh and Uttarakhand to obtain permission to manufacture Maggi. Nestle is also working on starting manufacturing of Maggi Noodles at its two other plants - Tahliwal and Pantnagar.

Furthermore, Nestle India conducted over 3,500 tests representing over 200 million packs in both national as well as international accredited laboratories and all reports are clear.

Nestle India recently declared its results for the quarter ended September 2015. The Maggi controversy continued to take a toll on Nestle's financial performance as it reported a revenue decline of 20% YoY; the domestic business fell by a third, while exports were down by 6% YoY. Here is our detailed analysis of the results. (Subscription required)