Indian stock markets languished in the red throughout today's proceedings on the back of persistent selling activity across index heavyweights. There was no respite in the final trading hour either and the indices closed well below the dotted line. While the BSE-Sensex closed lower by around 264 points (down 1.5%), the NSE-Nifty closed lower by around 89 points (down 1.6%). The BSE Mid Cap and the BSE Small Cap were not spared either as they closed lower by 1% each. Losses were largely seen in metals and banking stocks.
As regards global markets, Asian indices closed in the red today while European indices have opened mixed. The rupee was trading at Rs 51.36 to the dollar at the time of writing.
Pharma stocks closed mixed today. While Ranbaxy and Dr. Reddy's (RDY) found favour, Cadila Healthcare and Sun Pharma closed into the red. Pharma major Glenmark Pharma's subsidiary Glenmark Generics has received US FDA approval to launch the generic version of the drug 'Ortho Cyclen.' This is a female hormonal product belonging to the innovator Janssen Pharmaceuticals and had generated total sales to the tune of US$ 88 m for the 12 month period ending December 2011. It must be noted that this is the tenth female hormonal product that Glenmark has been authorized to distribute by the US FDA. This is a positive for the company and will enhance revenues from the highly competitive US generics market. Glenmark has been consciously looking to launch niche products having lesser competition and therefore the potential to earn higher revenues and profits and oral contraceptives is one such field.
Steel stocks closed in the red today with the key losers being Tata Steel and Steel Authority of India Ltd (SAIL). As per a leading business daily, the Indian steel industry is expected to increase production capacity by 20% to 100 m tonnes per annum (mtpa) by 2013. This would largely be a result of expansion of existing capacity i.e. brownfield projects rather than adding fresh capacity. Having said that, demand for steel has not been able to keep pace with supply on account of slowdown in government spending on infrastructure and higher interest rates. Further, having put in steel production capacity, the steel industry is expecting the government to ensure that the required raw materials such as iron ore and coking coal are made available. Whether increased steel capacity will lead to a pressure on realisations remains to be seen. For the time being, the year has started on a good note for steel companies as they have increased prices on the back of good demand from construction and automobile sectors. The hike in prices is also to partially offset the increase in cost of production due to hike in freight rates.