Indian markets trade jubilantly on firm global cues; Nifty surpasses 6,200 level

Buoyed by firm global cues, Indian equity indices are trading jubilantly with both the frontline gauges trading at their highest levels since November 2010, surpassing their crucial 20,400 (Sensex) and 6,200 (Nifty) levels. Strong fund flows have been the biggest driver of the current rally. Foreign investors have been net buyers for 21 consecutive sessions as of May 16, 2013, bringing in a net of about $13 billion in 2013. Buying in banking sector too supported the sentiments as the Reserve Bank of India (RBI), proposed a review of all banking licences from the ‘fit and proper’ angle, following the allegations made by Cobrapost, which involves assessment of the promoters, management, CEOs of even the existing banks.

Global indices too remained jubilant with the US markets ending higher on Friday in a reversal from the previous session on the back of some good economic data, while the Asian markets too were trading in green at this point of time as sentiments in the region got a boost with the sign of improving global economic recovery. Japanese government upgraded its outlook for the domestic economy in a report released on May 20, 2013.

Back home, PSU banking stocks gained after global investment bank CLSA put out a buy rating on them citing a boost to profits in the next quarter (Q1FY14). Healthcare stocks such as drug maker Lupin saw sharp cuts. Lupin declined over 3 per cent after Credit Suisse downgraded the stock to neutral citing unfavourable risk-reward. On the sectoral front, auto witnessed the maximum gain in trade followed by metal and fast moving capital goods, while healthcare remained the lone loser on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was positive; there were 865 shares on the gaining side against 479 shares on the losing side while 46 shares remain unchanged.

The BSE Sensex opened at 20,277.76; about 8 points lower compared to its previous closing of 20,286.12, and has touched a high and a low of 20,441.82 and 20,277.76 respectively.

The index is currently trading at 20,404.48, up by 118.36 points or 0.58%. There were 24 stocks advancing against 6 declines on the index.

The overall market breadth has made a strong start with 62.15% stocks advancing against 34.74% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices up by 0.63% and 0.47% respectively. 

The top gaining sectoral indices on the BSE were, Auto up by 1.71%, Metal up by 1.08%, FMCG up by 0.79%, Capital Goods up by 0.65% and PSU up by 0.63% while, Health Care down by 0.60% was the sole losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 3.25%, Maruti Suzuki up by 1.88%, Coal India up by 1.75%, SBI up by 1.46% and Mahindra & Mahindra up by 1.39%.

On the flip side, Wipro was down by 1.99%,  ICICI Bank was down by 0.70%,  Sun Pharma was down by 0.41%, Cipla was down by 0.39% and  ONGC was down by 0.29% were the top losers on the Sensex.

Meanwhile, with the government issuing the long-pending Drug Price Control Order (DPCO), prices of 348 essential drugs are expected to reduce by up to 80% in case of life-saving ones and on an average by 20-25% in general. The government on May 16 notified DPCO with effect from May 15, replacing the 1995 order. The new order will empower the National Pharmaceutical Pricing Policy 2012 to regulate prices of 348 essential drugs, while the existing policy controls only 74 bulk drugs.

Under the new policy, prices of 652 formulations under 27 therapeutic areas like anti-allergic (cetrizine), cardiac (aten), gastro-intestinal medicines (ocid), pain-killers (paracetamol) and anti-diabetic drugs (insulin) are expected to come down. Others in the list include anti-fungal, anti-tuberculosis, anti-leprosy, anti-hypertensive’s and cancer drugs. Imported drugs will also be brought under price control.

Further, the drug pricing regulator - National Pharmaceutical Pricing Authority is likely to announce in the next few weeks, in tranches the ceiling prices of 652 formulations, which will serve as the benchmark for companies. Moreover to make the relevant changes in their prices, the industry will be given 45 days to clear the existing stock.

Further the prices of drugs, which are currently higher than the new ceiling rate will have to be cut, those priced below the rate cannot be raised to the ceiling level, and manufacturers will not be able to halt production of any drug without government permission. However, manufacturers of non-essential medicines will be allowed to increase their prices by 10% a year, while new products which are discovered and developed in India could seek exemption from price controls for five years.

The policy uses a market-based pricing method: 'the simple average method' for determining the ceiling price of all the molecules (drugs) under a particular therapeutic area with over 1% market share. The price to the consumer will be determined by adding 16% margin (to the retailer) as well as the local taxes to the average price (ceiling price).

The CNX Nifty opened at 6,198.00; about 10 points higher as compared to its previous closing of 6,187.30, and has touched a high and a low of 6,229.45 and 6,195.25 respectively.

The index is currently trading at 6,216.65, up by 29.35 points or 0.47%. There were 35 stocks advancing against 15 declines on the index.

The top gainers of the Nifty were Tata Motors up by 3.25%, Bank of Baroda up by 1.99%, Maruti Suzuki up by 1.96%, Coal India up by 1.85% and UltraTech Cement up by 1.79%.

On the flip side, Lupin down by 3.46%, Ranbaxy Laboratories down by 2.12%, ICICI Bank down by 0.85%, ONGC down by 0.63% and BPCL down by 0.63%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 20.32 points or 0.89% to 2,303.19, Hang Seng surged 399.96 points or 1.73% to 23,482.64, Jakarta Composite jumped 54.02 points or 1.05% to 5,199.71, KLSE Composite increased 7.50 points or 0.42% to and Nikkei 225 was up by 220.21 points or 1.45% to 15,358.33.

On the flip side, Straits Times slipped 2.17 points or 0.06% to 3,447.13, KOSPI Composite dipped 0.63 points or 0.03% to 1,986.18 and Taiwan Weighted was down by 9.07 points or 0.11% to 8,359.12.