Benchmarks drift lower ahead of series expiry

Indian equities have lost further ground to continue their weak trade in the late afternoon session on back of persistent selling in frontline counters. Investors have turned cautious ahead of F&O series expiry and as Moody’s Investors Service expects India’s fiscal deficit to exceed 5.1% despite the recent moves by the government to rein in deficit and has said that the recent reform measures won't improve India's credit profile and only serve as sentiment boosters, as the country is still constrained by its fiscal deficit. Traders were seen piling up position in FMCG, Consumer Durables and Capital Goods sector while selling was witnessed in Oil & Gas, IT and TECk sector. In the scrip specific development, Religare Enterprises was trading in green after the company confirmed that the US-based Invesco will acquire 49% stake in its subsidiary Religare Asset Management. Tata Power is trading firm on reports that the Central Electricity Regulatory Commission will take up the final hearing on the tariff revision plea of the company for the 4,000 MW Mundra project today. Maruti Suzuki India, the country’s largest car manufacturer, was trading in green as HSBC has raised the target price of the stock. SAIL and Sterlite Industries were under pressure as the stocks will be replaced by Lupin and UltraTech Cement on Nifty from Friday.

On the global front, most of the Asian markets were trading in green while the European markets too were trading on optimistic note.  Spain’s financial troubles have come back into focus in way that’s been certainly more stressful for the Spanish bond market, the euro-zone peripheral bond markets and, by extension, the euro. Investors are nervous ahead of key events in Spain that are tied to Europe’s efforts in curbing its long-running debt crisis. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,700 and 18,700 levels respectively. The market breadth on BSE was positive in the ratio of 1441:1241 while 157 scrips remain unchanged.

The BSE Sensex is currently trading at 18,613.86, down by 18.31 points or 0.10% after trading in a range of 18,735.95 and 18,592.61. There were 11 stocks advancing against 19 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading up by 0.42% and 0.21% respectively.

The top gainers on the BSE sectoral space were, Fast Moving Consumer Goods (FMCG) up by 0.95%, Consumer Durables (CD) up by 0.70%, Capital Goods (CG) up by 0.60%, Auto up by 0.36% and Power up by 0.28%. While Oil & Gas down by 1.38%, Information Technology (IT) down by 0.68%, TECk down by 0.39%, PSU down by 0.34% and Metal down by 0.09% were the top losers on the sectoral space.

The top gainers on the Sensex were Tata Power up by 5.02%, Mahindra & Mahindra up by 1.73%, L&T up by 1.55%, Maruti Suzuki up by 1.16% and SBI up by 0.89%. On the other hand, ONGC down by 1.97%, BHEL down by 1.82%, Reliance Industries down by 1.38%, Infosys down by 1.37%, and Wipro down by 1.15% were the top losers on the Sensex.

Meanwhile, the long-awaited new pricing formula for essential drugs is likely to be finalized as the Group of Ministers (GoM) chaired by Agriculture Minister Sharad Pawar is meeting today, but it might seek some more time from Supreme Court to finalize and draft its recommendations. This would be the fifth meeting of the panel. In the last meeting, the GoM had agreed to study extensively on the pricing strategies that the emerging countries like Mexico, South Africa, Bangladesh and Sri Lanka followed for essential medicines and before finalizing the policy on drug pricing in India.

The Commerce and Industry Minister Anand Sharma had confirmed that the group has made progress in formulating the policy. Minister of State for Chemicals and Fertilizers Srikant Jena had also claimed that it had received approval for the inclusion of 348 drugs in the National List of Essential Medicines (NLEM).

While only about 72 bulk drugs and formulations are currently controlled by National Pharmaceutical Pricing Authority (NPPA). If the centre approves the formula, medicine prices are likely to drop by an average of 20%, based on weighted average and brings in 348 medicines under price control. And, about 30% of the pharmacy market is expected to come under the price control as against the present 18%. This calls for 10-12% of revenue loss for the essential medicines’ industry.

The domestic medicine market is estimated to be at about Rs 65,000 crore annually. As per the new proposed policy, the price control will be applicable on imported drugs also. The present cost-plus pricing mechanism of medicines allows cap on prices of imported drugs based on their landed cost declared by the company and the imported drugs are enjoying advantage over the domestically manufactured ones as the regulator does not have the wherewithal to cross check the landed cost.

The UPA government had failed to pass price control of essential drugs in its previous term and last year it came up with a draft of National Pharmaceutical Pricing Policy 2011 through the Department of Pharmaceuticals. However, the policy was laying unapproved since ministries of health and chemicals and fertilizers deferred in opinion.

The S&P CNX Nifty is currently trading at 5,653.55, down by 9.90 points or 0.17% after trading in a range of 5,693.70 and 5,647.25. There were 22 stocks advancing against 28 declines on the index.

The top gainers of the Nifty were Tata Power up by 4.33%, HCL Tech up by 3.01%, L&T up by 1.73%, Maruti Suzuki up by 1.29% and HUL up by 1.25%. While, Cairn India down by 3.01%, ONGC down by 2.32%, SAIL down by 1.91%, BHEL down by 1.91% and Sesa Goa down by 1.71% were top losers on the index.

All the Asian indices were trading in green, Shanghai Composite added 2.60%, Kospi Composite Index gained 0.42%, Taiwan Weighted rose 0.18%, Hang Seng surged 1.14%, Nikkei 225 shot up by 0.48%, Jakarta Composite spurted by 0.92%, Straits Times ascended by 0.43% and KLSE Composite advanced 0.68%.

The European markets were trading in green with, France’s CAC 40 ascending 0.25%, Germany’s DAX added 0.26% and the United Kingdom’s FTSE 100 inched up by 0.15%.