Benchmarks scoop additional gains; sanguine regional counterparts aid

Benchmark equity indices have gained additional traction as sanguine regional counterparts, underpinned investor’s appetite for risky asset class such as equities.  Asian pacific shares were on gaining spree as investors bet for more monetary policy stimulus to support the faltering global economy, ahead of a policy meeting by the European Central Bank, while overnight rally of US equities on the back of better-than-expected economic data, also added to the zeal of the bourses. Reversing two months of declines, orders for US factory goods were up 0.7% in May.

Closer home, 30 scrip sensitive index, Sensex, was trading below the intra-day high level. Similarly, the widely followed index, Nifty, too managing to gain a little traction, was trading above the 5300 crucial level. The broader indices, outperforming larger counterparts, were trading with gains of above half a percentage points. On the BSE sectoral chart, stocks from Metal, Auto and Realty counters managed to gain maximum traction, on the flip side, stocks from Oil & Gas,  Fast Moving Consumer Goods and  Information Technology counters emerged as the top laggards. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1532:702, while 100 shares remained unchanged.

The BSE Sensex is currently trading at 17,482.50, up by 56.79 points or 0.33%. The index has touched a high and low of 17,523.77 and 17,445.06 respectively.  There were 21 stocks advancing against 9 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.83% and 0.78% respectively.

The top gaining sectoral indices on the BSE were, Metal up by 1.79%, Auto up by 1.10%, Realty up by 1.02%, Consumer Durable up by 1% and Power up by 0.59%. While, Oil and Gas down by 0.48%, FMCG down by 0.26% and IT down by 0.25% remained the few losers on the index.

The top gainers on the Sensex were Jindal Steel up by 3.19%, Sterlite Industries up by 2.99%, Maruti Suzuki up by 2.42%, Tata Steel up by 1.65% and SBI up by 1.30%.

On the flip side, ONGC down by 2.38%, Wipro down by 1.31%, HUL was down by 0.99%, Dr Reddy’s Lab down by 0.61% and Sun Pharma down by 0.52% were the top losers on the Sensex.

Meanwhile, in its endeavor to buttress research and development (R&D) capabilities in Indian pharmaceutical sector, the government is contemplating the idea of establishing a venture capital fund with a corpus of Rs 2,000 crore. The Commerce and Industry Minister Anand Sharma, who confirmed that the government was considering such a proposal for drug industry, also opined that talks with Export-Import (Exim) Bank in this regard are underway.

The commerce minister, who held meetings with top CEOs of Pharma companies that was also attended by a committee of secretaries including the commerce secretary, Department of Industrial Policy & Promotion secretary and the Drugs Controller General of India, was evaluating the performance of pharmaceutical sector in India, which is third largest producer of pharma products by volume. The domestic pharmaceutical industry, which is growing at a rate of 15-20 per cent annually, is pegged at $20 billion and is expected to touch $75 billion by the end of this decade.

Voicing their concerns in the meeting, the industry representatives pointed at various challenges faced by them including problems in getting approvals from the Health Ministry. They also highlighted their apprehensions over takeovers of existing companies as it directly results in hike in the prices of many drugs and reduce generics (off-patent) drug production. Moreover, worries related to the non-tariff barriers imposed by the European Union, one of India’s biggest trade partners, were also underscored.

While Anand Sharma vowed to address the challenges with regards to financing of R&D, credit costs and duration faced by the sector, he also sought the industry’s opinion on the foreign direct investment (FDI) in the sector. India has allowed 100 percent FDI in new pharmaceutical projects but there still remains some uncertainty over FDI in projects that involve purchasing equity, or a controlling stake, in an existing company.

The proposal of mandatory transfer of technology by the foreign company to the acquired Indian company was also discussed in the meeting. The commerce minister discussed upon various measures to lay emphasis on commitment to quality, safety and efficacy of Indian medicines, ways to promote Brand India Pharma in important markets and the manner in which the country can attain a leadership position in exports.The S&P CNX Nifty is currently trading at 5,303.15, higher by 15.20 points or 0.29%. The index has touched a high and low of 5,317.65 and 5,293.15 respectively.  There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were Sesa Goa up by 3.36%, Jindal Steel up by 3.24%, Sterlite Industries up by 2.89%, Maruti Suzuki up by 2.46% and Tata Steel up by 1.57%.

On the flip side, ONGC down by 2.58%, Wipro down by 1.39%, Asian Paints down by 1.33%, BPCL down by 0.91% and ACC down by 0.74%, were the major losers on the index.

All the Asian markets were trading in the green; Hang Seng Index gained 0.12%, Jakarta Composite surged 0.78%, KLSE Composite added 0.30%, Nikkei 225 gained 0.51%, Straits Times Index advanced 0.40% and Taiwan Weighted climbed 0.05% and Kospi Composite accumulated 0.44%.On the flip side, Shanghai Composite down by 0.12% was the lone loser on the index.