Lackluster day of trading

Fri, 6 Nov Closing

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   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

The Indian markets had a rather volatile trading session today as the indices oscillated to either side of yesterday's close. At the closing bell, the BSE-Sensex closed lower by about 39 points, while the NSE- Nifty ended lower by about 2 points. Stocks from the healthcare, power and auto sectors were the least preferred today, while those from the banking and information technology spaces were in demand. The BSE Mid Cap and the BSE Small Cap too finished in the red with both the indices down by 0.4% and 0.6% respectively.

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.91% and the Nikkei 225 rose 0.78%. The Hang Seng lost 0.81%. European markets are lower today with shares in France off the most. The CAC 40 is down 0.63%, while Germany's DAX is lower by 0.27% and London's FTSE 100 is lower by 0.08%. The rupee was trading weak at 65.79 against the US$ in the afternoon session.

Healthcare stocks languished in the red today with Dr Reddy's Laboratories and Cadila Healthcare leading the losses. Shares of Dr Reddy's Laboratories plunged more than 14% in intraday trading today after it was reported that the company has received a warning letter issued by the US Food and Drug Administration (USFDA) relating to its API manufacturing facilities at Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as Oncology Formulation manufacturing facility at Duvvada, Visakhapatnam, and Andhra Pradesh. This action follows the earlier inspections of these sites by the agency in November 2014, January 2015 and February 2015 respectively. The US is one of the biggest generics market for domestic drug makers, and it contributes over 50% to Dr Reddy's revenues. The company has to respond to issues raised in the warning letter in 15 days.

In recent times, the US FDA has become very stringent with respect to quality norms of manufacturing plants and many top Indian pharma companies have run into trouble for not complying. Not just that. In one of our recent premium editions of the 5 Minute WrapUp, we had talked about how pharma companies 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.

Moving on to news from the auto sector. According to a leading financial daily, Mahindra and Mahindra's (M&M) South Korean subsidiary SsangYong Motor has sold a total of 13,359 units in October 2015 - 10,008 units in domestic sales and 3,351 in exports. This is the highest-ever monthly sales figures in 18 months since April 2014 (13,634 units), exceeding 13,000 units boosted by the strong sales of Tivoli. Tivoli's sales in October posted a record number since its launch in January 2015.

Ssangyong's October sales have increased by 15.2% YoY and 16.3% from the previous month. Ssangyong is accelerating efforts to increase its sales based on the aggressive product launch strategies such as upgrading its SUVs to satisfy the Euro 6 emission standards and releasing the diesel-powered Tivoli model. The company started to sell the Tivoli diesel and Tivoli 4WD model with a large-scale media test-drive event in Europe last month.