Markets get a mildly soft start on weak global cues

Markets made a cautious start on Wednesday, extending their consolidation mood of last session. The global cues too were mostly weak that lead the markets start slightly in red, traders are  a bit cautious in the region after the Federal Reserve Chairman Ben S. Bernanke said that low US interest rates will continue long after the central bank ends its program of bond buying. Back home, there is not much cue on the domestic front that could take the markets to either direction. Trade was also being weighed down by the weakness in rupee, which after two session’s of surge, is showing some weakness on demand for greenbacks by state-run oil refiners. Also, there was some cautiousness with the Paris-based Organisation for Economic Co-operation and Development (OECD) saying that Indian economy is expected to improve marginally in the current financial year with its GDP at market price projected to expand by 3.4 percent from 3.3 percent in the previous fiscal. Back on street, the banking sector was witnessing some profit booking along with IT and tech stocks, while the realty, power and metals were holding the forte. On the same time the broader indices were outperforming their larger peers.

The market breadth on the BSE was positive; there were 750 shares on the gaining side against 417 shares on the losing side while 47 shares remain unchanged.

The BSE Sensex opened at 20857.01; about 33 point lower compared to its previous closing of 20890.82, and has touched a high and a low of 20880.03 and 20811.91 respectively. The index is currently trading at 20838.51, down by 52.31 points or 0.25%. There were 13 stocks advancing against 17 declines on the index.

The overall market breadth has made a strong start with 61.78% stocks advancing against 34.35% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices were up by up by 0.51% and 0.59% respectively. 

The top gaining sectoral indices on the BSE were, Realty up by 1.75%, Power up by 0.76%, Metal up by 0.53%, Consumer Durables up by 0.30% and FMCG up by 0.15%, while Bankex down by 0.94%, Teck down by 0.22%, IT down by 0.20% and Capital Goods down by 0.17% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 1.40%, BHEL up by 0.34%, SSLT up by 1.24%, Jindal Steel up by 1.00% and Mahindra & Mahindra up by 0.93%. On the flip side, ICICI Bank was down by 1.67%, Infosys was down by 0.98%, HDFC Bank was down by 0.94%, Gail India was down by 0.78% and SBI was down by 0.62% were the top losers on the Sensex.

Meanwhile, amid rising concerns over increasing acquisitions of domestic pharma firms by multinationals, Foreign Direct Investment (FDI) in the pharma sector grew by more than doubled to $ 1.07 billion during April-August’ 2013 as compared to $ 487 million during  the same period last year.

The commerce and industry ministry is presently concerned over the rising acquisitions in domestic pharmaceutical industry and is proposing to tighten the FDI policy for the sector by incorporating conditions like mandatory investment in R&D and non-compete clause in the shareholders pact. The government is of the view that continuing acquisitions of Indian pharma firms by foreign companies would pose serious problems in availability of life-saving drugs to consumers in near future. It also wants restrictions on FDI in brown-field or existing pharma companies amid rising fears that such acquisitions could shrink India’s capacity of producing low-cost generic drugs. During the period from April 2012 to April 2013, over 96 percent of the total FDI in the sector has come into brown-field pharma.

Recently, the government has approved a Rs 5,168 crore proposal of US-based pharma firm Mylan Inc's to acquire Indian generic drugs company Agila Specialties. Such acquisition is likely to impact the industry genetic segment, which accounts for the largest chuck of the sector, with a share of around 72 percent in the total industry revenue. The Indian generic drug market grew at a CAGR of around 17 per cent between 2010-11 and 2012-13 mainly on the back of rising exports of generic drug due to their low cost.

The CNX Nifty opened at 6,186.85; about 16 points lower as compared to its previous closing of 6,203.35, and has touched a high and a low of 6,198.70 and 6,176.70 respectively. The index is currently trading at 6,191.60, down by 11.75 points or 0.19%. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were DLF up by 2.74%, NMDC up by 1.41%, SSLT up by 1.30%, Tata Power up by 1.27% and Jindal Steel & Power up by 1.21%. On the flip side, ICICI Bank down by 1.76%, BPCL down by 1.74%, IndusInd Bank down by 1.27%, Infosys down by 0.94% and HDFC Bank down by 0.85% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite was down by 14.16 points or 0.32% to 4,384.18, KLSE Composite declined by 2.99 points or 0.17% to 1,804.17, Nikkei 225 lost 15.05 points or 0.10% to 15,111.51, Seoul Composite was down by 9.45 points or 0.47% to 2,022.19 and Taiwan Weighted was lower by 25.66 points or 0.31% to 8,234.55

On the other hand, Shanghai Composite was up by 6.32 points or 0.29% to 2,199.44, Hang Seng gained 75.84 points or 0.32% to 23,733.65 and Straits Times was up by 2.85 points or 0.09% to 3,194.93.