Indian Markets Wednesday Wrap-Up: India Defies Fed's Generosity

Markets ended way below yesterday’s closing as selling activity was witnessed throughout the trading session. The BSE-Sensex closed lower by 250 points. The NSE-Nifty was down around 90 points. Stocks from the mid-cap and small-cap indices also ended in the negative territory. Software and metal stocks led the pack of losers. Rupee closed at 47.41 against the US dollar. As regards global markets, while the Asian markets closed firm, the European markets are trading lower currently.

Amidst financial crisis and turbulent market scenario, NTPC and BHEL JV has deferred its plan to divest 50% equity. The plan to dilute equity has been postponed by three years, till the company starts getting orders. NTPC- BHEL JV had plans to start with orders for engineering, procurement and construction works and ancillary power plant equipment. This decision has been taken in wake of worsening market scenario. The company believes once steady revenue will start flowing in, the company will be able to charge a premium on the equity to be sold. The stock of BHEL ended lower and stock of NTPC closed down marginally.

Nycomed US has filed a patent infringement lawsuit against Glenmark regarding the latter’s abbreviated new drug application (ANDA) for its ‘Fluticasone Propionate’ 0.05% lotion product. Nycomed currently markets its ‘Fluticasone’ product as ‘Cutivate’. Glenmark had earlier filed its ANDA containing a paragraph IV certification for a generic version of ‘Fluticasone Propionate’ lotion with the US Food and Drug Administration. Thus, Nycomed's lawsuit is part of the patent challenge process under the Hatch-Waxman Act. In the event that Glenmark successfully challenges Nycomed's patent, it will be entitled to a 180-day exclusivity period. ‘Cutivate’ 0.05% lotion had annual sales of US$ 33 m in the US, based on IMS sales data ending September 2008. Thus, with this filing, Glenmark has three products currently under litigation.

Oral care major Colgate has bought a 25% stake in Hyderabad-based SS Oral Hygiene Products for Rs 7.7 m. Colgate (CL) had last year purchased a 75% stake in this toothpaste manufacturer company along with Advanced Oral Care Products Pvt. Ltd, Goa and Professional Oral Care Products Pvt. Ltd., Goa for an undisclosed amount. With the acquisition of the remaining stake, SS Oral would now be merged with the parent company. The move would aid Colgate to reduce its costs and also meet the growing demand for oral care products. FMCG stocks ended higher.

Excise and customs duty collections, which account for more than 75% of indirect tax receipts of the government, declined by 8.3% YoY in November 2008. While excise duty collections fell by 15% YoY, customs duty receipts slipped by 1% YoY. The fall in excise collections is attributed to a sharp decline in manufacturing because of economic slowdown in the wake of the ongoing global financial crisis. This would make it difficult for the government to achieve the indirect tax collection target of Rs 3200 bn for the current financial year.

In international news, Merrill Lynch (MER) expects crude oil to touch US$ 25 a barrel in 2009. Crude prices, which touched a record high of US$ 147 a barrel this year, are currently hovering at US$ 45 per barrel. With demand falling on account of global recession, the prices have tanked 70% from its peak.