Benchmarks trade lower in early deals on weak global cues

Indian equity benchmarks have made a flat start and are trading in the red in early deals on Tuesday amid feeble global cues. Sentiments also remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 186.41 crore on September 22, 2014. Meanwhile, stocks related to PSU banks edged lower after global ratings agency Moody’s Investors Service, which has said that India’s state-run banks barely manage to meet the minimum capital requirements and the major 11 banks need between Rs1.5 lakh crore to Rs 2.2 lakh crore, or $26-$37 billion by 2019 to comply with the so-called Basel-III norms and the government will find it difficult to raise capital quickly in the current environment due to low bank valuations. However, losses remained capped as some support came in with Crisil saying that Indian economy may record 5.5% growth this fiscal as India is bound to benefit the most when oil prices come down and it will be visible this year, reducing the cost of production for those industries which use oil as a primary input.

On the global front, the US markets closed lower in last session with Dow pulling back well off last Friday’s record closing high. Traders went for profit booking, while the economic reports too came weak with unexpected drop in US existing home sales in the month of August. The Asian markets were showing some recovery following a soft start after a preliminary gauge of Chinese manufacturing unexpectedly climbed to 50.5 in September from a reading of 50.2 in August.

Back home, on the sectoral front, software, technology and power witnessed the maximum gains in trade, while realty, metal and capital goods remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1153 shares on the gaining side against 821 shares on the losing side while 71 shares remain unchanged.

The BSE Sensex opened at 27244.98; around 38 points higher as compared to its previous closing of 27206.74, and has touched a high and a low of 27256.87 and 27165.09 respectively. The BSE Sensex is currently trading at 27194.96, down by 11.78 points or 0.04%. There were 12 stocks advancing against 18 stocks declining on the index.

The overall market breadth remained in the favour of advances with 56.38% stocks advancing against 40.15% declines. The broader indices were trading in green; the BSE Mid cap index was up by 0.16%, while Small cap index up by 0.46%.

The gaining sectoral indices on the BSE were IT up by 1.12%, TECK up by 0.73%, Power up by 0.48%, Consumer Durables up by 0.38% and Healthcare up by 0.19% while, Realty down by 0.85%, Metal down by 0.54%, Capital Goods down by 0.44%, Oil & Gas down by 0.37% and PSU down by 0.33% were the losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.49%, TCS up by 1.34%, Dr. Reddys Lab up by 1.10%, Hindustan Unilever up by 0.92% and BHEL up by 0.90%. On the flip side, Hindalco down by 1.39%, Mahindra & Mahindra down by 1.12%, Bharti Airtel down by 0.90%, Larsen & Toubro down by 0.85% and ONGC down by 0.85% 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 opened at 8,144.40; around 2 points lower as compared to its previous closing of 8,146.30, and has touched a high and a low of 8,159.75 and 8,130.00 respectively.

The CNX Nifty is currently trading at 8,139.20, down by 7.10 points or 0.09%. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 1.84%, Wipro up by 1.72%, Tech Mahindra up by 1.47%, TCS up by 1.22% and Dr. Reddys Lab up by 1.04%. On the flip side, DLF down by 2.58%, Jindal Steel & Power down by 1.73%, Hindalco down by 1.54%, Mahindra & Mahindra down by 1.48% and Bharti Airtel down by 0.99% were the top losers.

Asian markets were trading mostly in the red; KOSPI Index slipped by 11.44 points or 0.56% to 2,027.83, Jakarta Composite contracted by 30.27 points or 0.58% to 5,189.53, FTSE Bursa Malaysia KLCI declined 5.18 points or 0.28% to 1,840.87 and Taiwan Weighted was down by 25.52 points or 0.28% to 9,109.13.

On the flip side, Hang Seng increased 4.94 points or 0.02% to 23,960.43, Straits Times surged by 8.38 points or 0.25% to 3,304.95 and Shanghai Composite was up by 15.02 points or 0.66% to 2,304.89.

The Japanese market remained shut for the trade today in observance of Autumn Equinox Day.