Indian Markets Monday Wrap-Up: Investors Succumb to Earnings Anxiety

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 |  Includes: EPI, IFN, IIF, JNPR, NVS
by: Equitymaster

After a reasonably strong start today, the Indian markets succumbed to investor anxiety about the upcoming earnings season. As the session progressed, heightened profit booking pressure on the heavyweights drew the indices closer to the dotted line. By the final hour, the selling activity pushed the BSE Sensex into the red. While the BSE Sensex closed lower by around 14 points, the NSE Nifty remained flattish (gains of around 5 points). The BSE Midcap and BSE Smallcap indices, however, managed to buck the trend. They gained around 0.9% and 1.9% respectively. The BSE FMCG and Oil & Gas indices were the key losers today.

Barring India, most Asian indices closed in the green today while the European indices have opened on a mixed note. The rupee was trading at Rs 45.38 to the dollar at the time of writing.

As per a business daily, after deciding to split its parent firm into functional verticals, DLF has now identified an overall new organisational structure. The country's largest real estate firm will now be broadly divided into three units: Devco, Rentco and the holding firm dealing with corporate functions. While Devco will incorporate all real estate ventures of the company, Rentco will take charge of all its rent-yielding assets like offices and malls. Going forward, any rent-yielding asset developed by any of the verticals under Devco will be shifted to Rentco. A new quasi entity will be created called DLF Holdings, which will aggregate the company's investments in areas such as hotels, clubs, convention centres, DLF Pramerica Life Insurance and asset management, DLF Metro JV, DLF Golf Resorts and PVR. The new corporate structure is expected to ensure better business focus and efficient use of capital for the company. The stock ended higher along with its peers in the realty space.

As per a leading business daily, Swiss pharma company Novartis AG (NYSE:NVS), the parent of Novartis India, has been granted a patent protection for its anti-cancer drug 'Nilotinib' in India by the Chennai Patent Office. This is a superior version of the blood cancer drug 'Gleevec' for which a patent was rejected in the country. Novartis AG markets 'Nilotinib' globally as 'Tasigna' and is used as the second-line therapy for 'Gleevec'-resistant patients. The drug was approved in the US three years ago. Most likely 'Nilotinib' will be marketed in the domestic market through Novartis India. Further, because a patent has been granted for this drug, no generic versions of the same will be allowed in the domestic market. This will enable Novartis India to earn higher revenues and margins from the drug. The development is a key positive for MNC pharma companies operating in India.

In other news, the investigation wing of the income tax (IT) department in Mumbai has unearthed a record Rs 13 bn in undisclosed income in the first nine months of FY10. The cases involve 16 companies, including 10 that are publicly traded. According to data compiled by the I-T department, the concealed income in FY10 was 56% more than the disclosures made in full fiscal year 2009. The listed entities searched by the department include Housing Development Infrastructure Ltd (HDIL), ABG Shipyard, Allcargo Global Logistics, Juniper Networks (NYSE:JNPR) and Polycab Wires. While the lapse in income tax compliance will certainly take a blow on the companies' tax dues, it also reflects very poorly on their overall corporate governance practices.