Markets continue to trade lackluster; Sensex trades sub 27,000 level

Local equity markets continue to trade lackluster in absence of any positive triggers that could lift the markets higher. The sentiment right from the start of trade has been downbeat tracking weak Asian peers ahead of China's flash manufacturing PMI data on Tuesday. Additionally, reports suggesting of FIIs turning net sellers, by selling shares worth a net Rs 65.30 crore on September 19, 2014, also weighed on the sentiment. However, losses remained capped as the data of Department of Industrial Policy and Promotion indicated that foreign direct investment in the services sector rose marginally to $1.03 billion during the April-July period of the ongoing fiscal, compared to $1.02 billion during the same period of the previous fiscal, 2013-14. Both, Sensex and Nifty were trading with loss of around half a percent, below the crucial 27,000 and 8,100 levels respectively. Meanwhile, broader indices were trading with profits in the range of 0.15%-0.50%.

On the global front, Asian shares skidded on Monday as investors awaited data this week that could provide more evidence of a slowdown in China after reports suggested China’s flash manufacturing PMI reading on Tuesday could come below the 50 level, indicating that manufacturing activity is contracting.

Closer home, most of the sectoral indices on BSE were reeling under pressure, however stocks from Consumer Durables, Fast Moving Consumer Goods (FMCG) and Oil & Gas counters were exceptions. On the flip side, stocks from Metal, Healthcare and Technology counters were the prominent losers of the session. Pharma stocks tanked after the government capped the prices of 36 drugs, including major anti-infectives, gastro drugs and vaccines. These medicines add to the list of ‘348’ drugs that are deemed as ‘essential’ and therefore subject to price caps and cover up-to 30% of the total drugs sold in the country. Additionally, metal shares came under pressure after prices of industrial metals and iron ore declined in global market on Monday. The overall market breadth on BSE was in the favour of advances, which thumped declines in the ratio of 1445:1230; while 82 shares remained unchanged.

The BSE Sensex is currently trading at 26977.34, down by 113.08 points or 0.42% after trading in a range of 26918.93 and 27010.22. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.13%, while Small cap index up by 0.52%.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.39%, FMCG up by 0.53%, Auto up by 0.16%, Oil & Gas up by 0.13% while, Metal down by 1.41%, INFRA down by 0.91%, IT down by 0.84%, TECK down by 0.79%, Power down by 0.74% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.08%, ONGC up by 1.59%, ITC up by 1.20%, Hero MotoCorp up by 0.74% and ICICI Bank up by 0.27%. On the flip side, Cipla down by 2.38%, BHEL down by 2.03%, Dr. Reddys Lab down by 1.91%, Tata Steel down by 1.90% and Mahindra & Mahindra down by 1.50% were the top losers.

Meanwhile, In yet another negative development for pharma companies, the government has capped the prices of 36 drugs, including major anti-infectives, gastro drugs and vaccines. These medicines add to the list of ‘348’ drugs that are deemed as ‘essential’ and therefore subject to price caps and cover up-to 30% of the total drugs sold in the country. Both, global and Indian pharmaceutical industries have been hit by the wide-ranging government-imposed price-reduction over the past year.

Pharma companies selling in India have been the worst hit as the prices in the country are already lowest in the world. Indian drugmakers, including Cipla, Ranbaxy Laboratories and Cadila Healthcare are among the companies that will be affected by the latest move. Further, the National Pharmaceutical Pricing Authority (NPPA), reportedly also is contemplating upon the idea of drawing up a list of mass consumption, essential life-saving drugs which could be included in the essential medicines list. These recommendations are expected to make way to the health ministry by mid-October.

Just few days back, National Pharmaceutical Pricing Authority (NPPA) brought prices of another 43 essential medicines to treat diseases like tuberculosis or heart ailments under a control regime, even though the Delhi High Court asked the Centre and the pharmaceutical companies to resolve the drug pricing issue. Thus, bringing incremental number of medicines under the price control regime has resulted into growing friction between the Government and the pharmaceutical industry, resulting in litigation.

Back in July NPPA had brought prices of over 100 non-scheduled drugs under price control as per paragraph 19 of Drug Prices Control Order (DPCO). Organization of Pharmaceutical Producers of India’s (OPPI) had opposed the move to fix caps on the prices of over 100 drugs which were non-scheduled formulations and lie outside the scope of National List of Essential Medicines (NLEM).

The CNX Nifty is currently trading at 8081.55, down by 39.90 points or 0.49% after trading in a range of 8064.80 and 8089.00. There were 12 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.14%, ONGC up by 1.86%, ITC up by 1.28%, PNB up by 1.05% and BPCL up by 0.91%. On the flip side, Asian Paints down by 3.30%, Cipla down by 2.55%, Dr. Reddys Lab down by 2.22%, IDFC down by 2.13% and Tata Steel down by 2.05% were the top losers.

Asian markets were reeling under pressure; Hang Seng down by 303.37 points or 1.25% to 24,002.79; Nikkei 225 down by 115.27 points or 0.71% to 16,205.90; Taiwan Weighted down by 105.8 points or 1.14% to 9,134.65; Shanghai Composite down by 38.93 points or 1.67% to 2,290.52; KOSPI Index down by 14.55 points or 0.71% to 2,039.27; Jakarta Composite down by 7.65 points or 0.15% to 5,219.93; Straits Times down by 6.71 points or 0.2% to 3,298.34 and FTSE Bursa Malaysia KLCI down by 1.8 points or 0.1% to 1,847.69