Late recovery help benchmarks to end near pre-close level

Indian frontline equity indices staged a smart recovery in the last leg of trade, after hitting intraday low, paring losses of over half a percent to finish near their pre-close level following revival in European markets. The late rebound in sentiments came on optimism that a funding deal for debt-choked Greece will ultimately be agreed. The local benchmarks, after roving near its previous close level in morning trade, drifted lower in the noon session as investor sentiment weakened as both Houses of the Parliament had to be adjourned due to uproar over foreign direct investment (FDI) in retail and SC/ST quota Bill. The psychological 18,500 (Sensex) and 5,600 (Nifty) levels proved as strong support levels as the key indices despite repeated attempts refused to go substantially below those levels.

The domestic bourses took U-turn in the late trade following recovery in European counterparts which entered into green trajectory, after progress was reported in talks to help Greece manage its huge debt and secure much needed aid payments. The International Monetary Fund (IMF) and the European Union are at odds on setting a target for Greece's debt by 2020, and the two sides are now 10 billion euros ($12.9 billion) apart. Meanwhile, Asian equity indices shut shop mostly in the green following a rally in the previous session, while dealers await another meeting on Greece’s bailout and the resumption of talks on the US fiscal cliff.

Back home, markets traded mostly in the red as sentiments got hammered by depreciation in Indian rupee. The Indian rupee continued to decline against the dollar for the fourth consecutive day by slipping another 13 paise to 55.34 on sustained demand of the American currency from banks and importers. Somberness also increased after telecom stocks declined amidst squabble over 2G reports. Public Accounts Committee (PAC) Chairman Murli Manohar Joshi today dismissed allegations by former auditor R P Singh that he tried to influence the outcome of the 2G report as an attempt to malign the institutions of CAG and PAC. Stocks of Pharmaceuticals companies like Cipla, Lupin, and Ranbaxy Lab also turned bitter after Union Cabinet endorsing the Group of Ministers' (GoM) recommendations on the National Pharmaceutical Pricing Policy, imposed a cap on prices of 348 essential medicines at the arithmetic average of prices all drugs in a particular segment with more than one percent market share.

However, the losses remain capped after Sugar stocks viz. Shree Renuka Sugars, Bajaj Hindusthan, Balrampur Chini, Rana Sugar and EID Parry, ended sweeter after Cabinet Committee on Economic Affairs (CCEA) made it mandatory for oil marketing companies (OMCs) - Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation to blend 5 percent ethanol with petrol. The committee, headed by Prime Minister Manmohan Singh, has also approved market-based pricing of the biofuel, opening the market for ethanol producers - mostly sugar companies.

The NSE’s 50-share broadly followed index Nifty down by just a point to hold its psychological 5,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by about eleven points to finish above the crucial 18,500 mark. However, broader markets outperformed benchmarks and ended slightly in the green. The market breadth remained in favor of declines as there were 1,315 shares on the gaining side against 1,498 shares on the losing side while 142 shares remain unchanged.

Finally, the BSE Sensex lost 10.77 points or 0.06% to settle at 18,506.57, while the S&P CNX Nifty declined by 1.15 points or 0.02% to end at 5,626.60.

The BSE Sensex touched a high and a low of 18,556.50 and 18,402.38, respectively. The BSE Mid-cap index was up by 0.06% and Small-cap index was up by 0.20%.

BHEL up 1.51%, Hero MotoCorp up 1.21%, Tata Power up 1.14%, Hindustan Unilever up 1.04% and Sun Pharma up by 1.00% were the major gainers on the Sensex. On the flip side, NTPC down 2.57%, Gail India down 1.95%, Cipla down 1.62%, Wipro down 1.38% and ITC down by 0.95% were the major losers on the index.

The few gainers on the BSE sectoral space were Auto up 0.33%, Oil & Gas up 0.27%, Consumer Durables (CD) up 0.16%, TECk up 0.08% and Capital Goods (CG) up 0.06%. While, PSU down 0.81%, Realty down 0.58%, Health Care (HC) down 0.37%, Bankex down 0.34% and Metal down 0.31% were major losers on the BSE sectoral space.

Meanwhile, with an objective to streamline the regulatory framework for pricing of drugs to ensure their availability at reasonable prices, Government of India has given approval for a new drug pricing policy- National Pharmaceutical Pricing Policy. The move will curtail prices of costly brands sold by domestic and international drugmakers in a market that already has rock-bottom medicine prices, analysts and industry officials are skeptical about the benefits of the policy.

The policy aimed at bringing 348 essential drugs under price control, was earlier approved by the Group of Ministers (GoM) on September 27 and was subsequently sent to the Cabinet. According to industry experts, the new policy is expected to cover up to 30 percent of the total drugs sold in the country. At present, the government through the National Pharmaceutical Pricing Authority (NPPA) controls prices of 74 bulk drugs and their formulations. Earlier, GoM, headed by Agriculture Minister Sharad Pawar proposed to fix prices based on weighted average of brands which have more than 1 percent market share.

However, during last month, the Supreme Court had set a deadline of November 27 for the government to finalise the policy while asking it not to alter the existing mechanism of cost-based drug pricing. The government has also considered providing sufficient opportunity for innovation and competition to support the growth of the Indian pharma industry. The policy, however, took long to finalise due to differences between ministries of health and chemicals and fertilisers.

The S&P CNX Nifty touched a high and a low of 5,637.75 and 5,593.55 respectively.

The top gainers on the Nifty were Asian Paint up 1.89%, BHEL up 1.60%, HCL Tech up 1.55%, Hero MotoCorp up 1.09% and Tata Motors up by 0.99%.

The top losers on the index were Ranbaxy down 3.28%, NTPC down 2.84%, GAIL down 2.16%, Grasim down 2.13% and Cipla down by 1.43%.

European markets were trading mixed. France’s CAC 40 down 0.04%, Germany’s DAX up 0.01% and Britain’s FTSE 100 was up by 0.14%.

Subsequent to previous session’s rally, Asian markets ended mostly up on Friday, ahead of another meeting on Greece's bailout and the resumption of talks on the US fiscal cliff. Meanwhile, Taiwan's markets jumped by 3.1%, bucked up by buying from government funds and other state efforts to restore confidence in the market, one of Asia's worst performers this year. Moreover, South Korea's Kospi Composite went home with green mark, supported by Samsung Electronics. Trade was subdued as Japanese markets closed for a public holiday.