Sensex, Nifty continue to trade lower

Mirroring weak European markets, Indian bourses continued to trade lower in late afternoon session. The plunge in the stocks of the blue chip firm too dampened sentiments. Stocks of cigarettes companies edged lower following the increase of compensation cess rates on cigarettes by the GST Council in view of the reduction in tax on the demerit good under the new indirect tax regime. The industry body Associated Chambers of Commerce & Industry of India’s (ASSOCHAM) report stating that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali, continued to weigh on the sentiments. Besides, some concerns also spread among the inventors with Fitch Ratings’ latest report that new indirect tax regime GST will have a negative impact on oil and gas, and SME sectors. The report also added that implementation risks will remain over the next 12 months due to the complexities of adopting the new system amid a culture of poor compliance, particularly among the traditional retail and SME sectors.

On the global front, European markets were trading in red, on the back of a disappointing set of results from blue chips including Ericsson and Lufthansa, while scaled-back expectations of rate hikes at central banks spurred some profit-taking in financials. Asian markets were showing mixed trend. Back home, in scrip specific development, Alembic Pharmaceuticals traded higher after the company received approval from the US Food & Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) for Olmesartan Medoxomil and Amlodipine Tablets, 20 mg/5 mg, 40 mg/5 mg, 20 mg/10 mg, and 40 mg/10 mg.

The BSE Sensex is currently trading at 31850.39, down by 224.39 points or 0.70% after trading in a range of 31626.44 and 31911.61. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.12%, while Small cap index was down by 0.11%.

The top gaining sectoral indices on the BSE were IT up by 1.04%, TECK up by 1.02%, Telecom up by 0.71%, Metal up by 0.60% and Bankex up by 0.52%, while FMCG down by 6.03%, Energy down by 0.99%, Oil & Gas down by 0.72%, Consumer Durables down by 0.62% and Utilities down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.09%, Dr. Reddy’s Lab up by 1.62%, Infosys up by 1.52%, Axis Bank up by 1.44% and Sun Pharma up by 1.44%. On the flip side, ITC down by 12.36%, Reliance Industries down by 1.76% and NTPC down by 0.74% were the top losers.

Meanwhile, on the back of expectations that $55 billion worth of drugs will become off-patented during 2017-19, credit rating agency, Care ratings in its latest report has said that Indian pharma export volumes to US are likely to rise in 2017-18 and will create an opportunity for Contract Research and Manufacturing Services (CRAMS) segment.

Of the total exports of $ 16.8 billion during the year 2016-17, majority of the exports, accounting for 40.6% were to the American continent followed by 19.7% to Europe, 19.1% to Africa and 18.8% within Asia. The credit rating agency however reported that due to pricing pressure and stiff competition, the total pharma exports from India during April-May 2017 fell by 8.5 percent to $2.5 billion and exports to USA decreased by 23% y-o-y to $723.4 million during the same period, adding that the industry will continue to witness pricing pressure in the US generics market due to consolidation of distribution channels and increase in competition.

The report further said that the pharma industry is also likely to face competition from other countries to get Abbreviated New Drug Application (ANDA) approval. It noted that in domestic market, the revenue growth rate of the industry was impacted on the back of stricter enforcement of Drug Price Control Order and going forward, with implementation of GST, there will be no major change in the prices of medicines.

The CNX Nifty is currently trading at 9870.80, down by 45.15 points or 0.46% after trading in a range of 9792.05 and 9885.35. There were 40 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.24%, Asian Paints up by 2.18%, ACC up by 2.04%, Infosys up by 1.77% and HCL Tech. up by 1.72%. On the flip side, ITC down by 12.15%, Aurobindo Pharma down by 2.32%, GAIL India down by 1.84%, Reliance Industries down by 1.76% and Tata Power down by 0.96% were the top losers.

Asian markets were trading mixed; KOSPI Index increased 0.94 points or 0.04% to 2,426.04, Shanghai Composite increased 11.1 points or 0.35% to 3,187.57, Taiwan Weighted increased 23.72 points or 0.23% to 10,481.26 and Hang Seng increased 54.36 points or 0.21% to 26,524.94. On the flip side, Nikkei 225 decreased 118.95 points or 0.59% to 19,999.91, Jakarta Composite decreased 30.08 points or 0.52% to 5,811.20 and FTSE Bursa Malaysia KLCI decreased 1.55 points or 0.09% to 1,753.64.

All European markets were trading in red; Germany’s DAX dropped 51.24 points or 0.41% to 12,535.92, UK’s FTSE 100 decreased 13.39 points or 0.18% to 7,390.74 and France’s CAC was down by 11.1 points or 0.21% to 5,219.07.