US FDA nod pushes Dr. Reddy's up

Tue, 24 Nov 02:30 pm

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   12:30 pm   

   Closing   

Despite persistent efforts to pare the losses witnessed during the early hours of trade today, Indian stock markets continued to languish below the dotted line during the previous two hours of trade. Currently, stocks from the metal, oil & gas, banking and FMCG sectors are dragging the markets, while stocks from the auto, consumer durables, telecom and IT sectors are trading higher.

The BSE-Sensex and the NSE-Nifty are trading lower by around 40 points and 15 points respectively. However, the BSE-Midcap and BSE-Smallcap have bucked the trend and are trading in the green, up by around 0.3% and 0.4% respectively. The rupee is trading at 48.60 to the dollar.

According to a leading business daily, the US FDA which recently inspected two of Dr Reddy's manufacturing plants has given a clean chit to one and a minor observation to the other under current Good Manufacturing Practices (cGMP) standards. It may be noted that this plant came under the USFDA scanner since Dr.Reddy's (DRL) voluntarily recalled some of the products manufactured here from the US market. Given the spate of problems that Indian pharma companies are having with the US FDA, the clean chit given to one of the company's plants is a huge positive. Having said that, though the observation on the other plant seems minor, it will be in Dr.Reddy's interest to sort this issue as soon as possible.

Leading Indian power equipment manufacturer, BHEL has won a super critical green-field project worth Rs 56 bn from the Uttar Pradesh government. This order comprises of setting up the upcoming 1,980 MW Prayaraj thermal power project in the state. According to the contract, BHEL will be responsible for setting up the turbines, generators and auxiliaries as well as instrumentation for the plant near Allahabad.

It may be noted that BHEL recently upgraded its technology base from sub-critical sets to supercritical sets of 660/800 MW and above. The company's focus on high-end technology is clear from its ongoing collaboration agreements with Alstom, France and Siemens, Germany, which have a technology transfer arrangement. This coupled with the company's capability to manufacture most of the components that go into the production of supercritical equipments in-house will go a long way in keeping the competition at bay. The stock is currently trading in the red.