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Metals drags Indian stock markets
Thu, 22 Dec 09:30 am

Asian stock markets have opened the day on a weak note. Stock market in Japan (down 0.5%), Hong Kong (down 0.5%), China (down 0.4%) and Singapore (down 0.3%) are in the red. The Indian stock markets have opened the day on a weak note. Stocks in the Information Technology and metals space are leading the losses. However, FMCG stocks are in the green.

The BSE-Sensex is trading lower by 153 points (1%) and the NSE-Nifty is down by around 43 points (0.9%). Mid cap and small cap stocks have opened on a weak note, with the BSE Mid Cap and BSE Small Cap indices down by 0.7% and 0.5% respectively. The rupee is trading at 52.78 to the US dollar.

Pharma stocks have opened the day on a weak note with Ranbaxy and Biocon trading in the red. Indian drug maker Ranbaxy Laboratories announced yesterday that it had reached an agreement with the health regulator US Food and Drug Administration (US FDA) to lift a ban on import of drugs from some of its factories in India. This could lead the drug maker to make a payment of up to US$ 500 m as fine to the US authorities. As per a statement released by the company, it said that it had "signed a consent decree" with the USFDA and the same is subject to approval by the US District Court for the District of Maryland. Following this, the Ranbaxy's parent firm Daiichi Sankyo revised its earnings forecast and salary cuts for its directors. In 2008, the USFDA had banned 30 generic drugs produced by Ranbaxy at its Dewas unit in Madhya Pradesh, Paonta Sahib and Batamandi unit in Himachal Pradesh, on the grounds of gross violation of approved manufacturing norms.

Energy stocks have opened the day on a firm note with Coal India and Reliance Industries in the green. The decline in rupee from 45 to 53 level seems to have worked very positively for Reliance Industries. The dollar based pricing strategy of Reliance's KG Basin D6 gas fields will allow it to earn additional Rs 35/mBtu. Reliance is currently selling 40 million standard cubic meters (scm) of gas per day which in turn will result in an additional revenue of Rs 45 m per day. In the original proposal for pricing strategy by Reliance, it had quoted a rupee denominated price. However, the government changed it to dollar based pricing on the recommendation of Economic Advisory Council. The gain by Reliance due to the decline in rupee will however be indirectly paid by the consumers of gas in the form of higher payments.

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