Feeble global cues drag benchmarks lower in early deals

Pressurized by feeble global cues, Indian equity benchmarks have made a weak start and are trading in red, breaching their crucial 31,600 (Sensex) and 9,850 (Nifty) levels. Traders opted to book profits in risky assets after three days of continuous rally lacking any major trigger on the domestic front. Traders shrugged off report by real estate consulting firm CBRE South Asia that India has surpassed China in the global Retail Development Index in 2017, indicating growing prominence of the country as a preferred retail destination for global brands. Traders failed to get any sense of relief with report that the government gave some relief to taxpayers availing of transitional input tax credit under the GST (Goods and Services Tax) regime by giving them an extra week till 28 August 28 to file tax returns.

On the global front, most of the Asian counters were trading in red at this point of time amid concern over a terrorist attack in Spain. The US markets suffered sharp sell-off in the last session with all the major averages deposing well over a percent each, on concerns about ongoing political turmoil in Washington, D.C.

Back home, pharma stocks were reeling under pressure despite reports that the government has proposed to revamp the country’s drug pricing regulator National Pharmaceutical Pricing Authority (NPPA), allowing it to set prices of only essential medicines. Stocks related to IT pack too edged lower led by around seven percent fall in Infosys after Vishal Sikka quits as Infosys CEO, citing distractions and personal attacks.

The BSE Sensex is currently trading at 31593.10, down by 202.36 points or 0.64% after trading in a range of 31500.84 and 31729.88. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index shed 0.24%, while Small cap index was down by 0.57%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.83%, FMCG up by 0.71%, Consumer Durables up by 0.59%, Energy up by 0.32% and Telecom was up by 0.25%, while IT down by 2.07%, TECK down by 1.70%, Healthcare down by 0.84%, Bankex down by 0.74% and Industrials was down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.89%, Power Grid Corporation up by 1.78%, ITC up by 1.41%, Hindustan Unilever up by 0.68% and Mahindra & Mahindra up by 0.49%. On the flip side, Infosys down by 6.72%, Sun Pharma down by 1.76%, HDFC down by 1.22%, Tata Motors - DVR down by 1.14% and Adani Ports & SEZ down by 1.11% were the top losers.

Meanwhile, the government is going to dilute the powers of the National Pharmaceutical Pricing Authority (NPPA), the body that regulates drug prices, as the Draft Pharmaceutical Policy, 2017, which focuses heavily on prices of medicine, has proposed massive dilutions in the existing framework, which would give more control to the government over the operations of the NPPA.

The draft attempts to strip the NPPA of some powers, like once the price for a drug is fixed the pricing authority would not be allowed to revise them. The NPPA would also lose its power to cap the prices of in-patent medicines, and would be able to use its “emergency powers” only on the government’s orders.

It states that “this Policy would significantly contribute to the Ease of Doing Business in the pharmaceutical sector… The ‘Make-in-India’ programme would also get an impetus by the actions”. Further adding that “the regulator and the government would be two distinct agencies, the government shall not be the regulator and the regulator shall not be the government,” yet a government-appointed advisory body, with representation from the government, industry, as well as civil society, is being proposed.

The draft pharmaceutical policy, prepared by the department of pharmaceuticals under the ministry of chemicals and fertilizers, has proposed that an advisory body, members of which will include industry representatives nominated by the government, will assist the NPPA in fixing prices. The government will prepare the list of medicines for price regulation and transmit them to the NPPA for fixing the price ceilings.

The CNX Nifty is currently trading at 9840.80, down by 63.35 points or 0.64% after trading in a range of 9816.30 and 9865.95. There were 16 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.78%, Indian Oil Corporation up by 1.88%, TCS up by 1.78%, Tech Mahindra up by 1.78% and Power Grid Corporation up by 1.78%. On the flip side, Infosys down by 6.55%, Zee Entertainment down by 2.56%, Vedanta down by 1.74%, Indusind Bank down by 1.74% and Bank of Baroda down by 1.65% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 217.46 points or 1.1% to 19,485.17, Hang Seng decreased 194.53 points or 0.71% to 27,149.69, Taiwan Weighted shed 56.34 points or 0.54% to 10,313.03, Shanghai Composite slipped 6.42 points or 0.2% to 3,262.01, FTSE Bursa Malaysia KLCI dipped 2.94 points or 0.17% to 1,773.37 and KOSPI Index was down by 2.62 points or 0.11% to 2,359.05.

On the flip side, Jakarta Composite was up by 1.86 points or 0.03% to 5,893.81.