Indian share markets climb higher

Wed, 26 Dec 01:30 pm

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As all-round buying across heavyweights continued to rule the roost, Indian share markets firmed up further in the post noon trading session. Barring IT, all the sectoral indices are trading positive with capital goods, realty and banking stocks being the biggest gainers.

BSE-Sensex is up 184 points and NSE-Nifty is trading up 51 points. While BSE Mid Cap is trading up 0.8%, BSE Small Cap index is trading up by 0.5%. The rupee is trading at 54.9 to the US dollar.

Majority of the domestic pharma stocks are trading in green with Glenmark Pharma and Fresnius Kabi being the major gainers. According to a leading financial daily, the Cabinet approval of the National Pharmaceutical Pricing Policy (NPPP), 2012 has brought 348 essential medicine formulations under government price control. Currently, the government fixes the prices of 74 bulk drugs on a cost-plus basis. As per the new policy, drug prices will be determined on the basis of the arithmetic average of all drugs in a particular segment having at least 1% market share. The Indian Pharmaceutical Alliance (IPA) has said that the new policy is likely to impact the profitability of the pharmaceutical industry by around 25% but has welcomed the policy due to its transparent pricing mechanism as compared to opaque and intrusive cost plus pricing mechanism presently followed. Reportedly, large companies like Abbot, GSK Pharma, Cipla, Ranbaxy and Cadila having a huge domestic presence will be impacted significantly. Even multinational pharma companies having a large number of essential drugs in their portfolio will be hit hard by the new policy.

Most of the construction stocks are trading positive with Lok Housing & Construction and Unitech being the biggest gainers. Discussing his views on the infrastructure sector, the chairman of midcap construction company IVRCL stated that regulatory changes need to be made in order to accelerate India's infrastructure growth. According to him, the government and the RBI need to address concerns with the latter helping in the form of lowering interest rates. With interest rates moving from levels of about 8% to levels of 12%, profitability levels of construction companies have compressed. Apart from concerns relating to interest rates, the company's chairman also believes that companies from the sector are looking at divesting stakes in mature assets in order to fund new ones. However, IVRCL has clearly mentioned that it would be staying away from BOT projects and would be focusing on EPC projects for a while. In the meanwhile, the company's focus would be on project implementation. At the end of the quarter ended September 2012, IVRCL's order book stood at levels of Rs 270 bn. The stock is currently up 3.5%.