Sensex & Nifty Remain Lackluster; M&M Up 1.8%

Mon, 5 Dec 01:30 pm

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The Indian share markets continues to trade flat during the noon trading session amid weakness in global markets following the defeat of a referendum in Italy resulting in the Italian Prime Minister's resignation. Sectoral indices are trading on a mixed note with consumer durables & IT stocks trading in the red. While auto & FMCG stocks are witnessing buying interest.

The BSE Sensex is trading lower by 29 points while the NSE Nifty is trading lower by 6 points. The BSE Mid Cap index is trading up by 0.2% and BSE Small Cap index is trading down by 0.1%. Gold prices, per 10 grams, are trading at Rs 28,068 levels. Silver price, per kilogram is trading at Rs 41,120 levels. Crude oil is trading at Rs 3,499 per barrel. The rupee is trading at 68.37 to the US$.

According to a leading financial daily, Mahindra & Mahindra's (M&M) board has approved the demerger of Mahindra Two Wheelers Ltd.'s two-wheeler undertaking, which manufactures and sells two wheelers.

Reportedly, M&M approved a scheme of arrangement which envisages demerger of the two wheeler undertaking of its step down subsidiary Mahindra Two Wheelers (MTWL) and transfer and vesting thereof as a going concern into the company. All assets and liabilities of Mahindra Two Wheelers Ltd (MTWL) pertaining to the two wheeler undertaking would be transferred to M&M.

The proposed demerger is in line with M&M's strategy of focusing on niche premium two-wheeler segment. It would enable the two-wheeler undertaking to benefit from the company's design and development and sourcing capabilities. The demerger would also enable the demerged entity to enhance focus on the spares business.

Moreover, M&M's wholly owned subsidiary Mahindra Vehicle Manufacturers Ltd (MVML) holds 91.3% stake in Mahindra Two wheelers. The merger is likely to strain M&M financials. Also, M&M would have to issue 50 million shares to other shareholders of the undertaking leading to equity dilution of about 0.1%, the reports noted.

Meanwhile, M&M reported a 21.85% decline in total sales at 32,499 units in November. The company had sold 41,590 units in the same month last year.

M&M's Total Sales Performance Over Last Six Months

The company has posted 24% de-growth in domestic sales for the month of November 2016, and stood at 29,814 units. Its exports, however, went up by 22 percent and stood at 2,685 units.

According to the company, the sudden announcement of Demonetisation has brought in an immediate disruption and uncertainty. It has dampened the overall sentiment, leading to postponed buying, thereby, resulting in a major dip in volumes during November.

Mahindra & Mahindra's share price was trading up by 1.8% while writing.

Moving on to the news from stocks in pharma sector. As per an article in Livemint, Alembic Pharmaceuticals has received approval from the US health regulator for Zolmitriptan Orally Disintegrating tablets in the American market. The tablets are used for the treatment of migraine.

The company has received approval from the US Food and Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) for the Tablets in the strengths of 2.5 and 5 mg. Further, the product is therapeutically equivalent to the reference listed drug product (RLD) Zolmig-ZMT Orally Disintegrating tablets of firm AstraZeneca Pharmaceutical Company in the same strengths.

Notably, the company currently has 51 ANDA approvals (45 final and 6 tentative from USFDA).

Meanwhile, in a major relief to the pharmaceutical sector, the Delhi high court recently overturned a government ban on more than 300 fixed dose combination (FDC) drugs.

Reportedly, the government banned 344 FDC drugs on 10 March, citing health risks and lack of therapeutic justification. An FDC is a cocktail of two or more active drug ingredients in a fixed ratio of doses. The health ministry had banned these FDC medicines over fears that they cause anti-microbial resistance and might even cause organ-failure because of high toxicity.

Some major firms involved in the case were Pfizer, Wockhardt Ltd, Alkem Laboratories Ltd, Cipla Ltd, Sanofi India Ltd, Sun Pharmaceutical Industries Ltd. The major brands included in the ban were P&G's cold and cough drug Vicks Action 500 Extra, Piramal's Saridon, Reckitt's D Cold Total and Glenmark's Ascoril-C.

However, the quashing of the notification does not imply that the drugs will now be available in the market. The Centre may challenge the judgment in the Supreme Court or take the steps prescribed under the Drugs Act, the reports noted.

The government aims to organize India's healthcare system. As it weeds out irregularities from the healthcare sector, pharma companies are likely to face such challenges in this process. Bhavita Nagrani, our Research analyst has penned an article fixed combination drugs (Subscription Required). She has offered insights on how the ban will impact pharma companies that form a considerable part of FDC drugs falling into the category.

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