India Markets Thursday Wrap-Up: Sustained Buying Fuels Indices

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 |  Includes: EPI, IFN, IIF, INDY, INR, PIN, RBXZF, RDY, SCIF, SCIN
by: Equitymaster

Indian equity markets traded firm throughout the trading session today on the back of sustained buying activity across index heavyweights. Although trading was largely rangebound in the morning session, buying pace picked up post noon. The final hours saw the indices inch upwards to close well above the dotted line. While the Sensex today closed higher by around 195 points (up 1%), the NSE-Nifty today closed higher by around 53 points (up 1%). The BSE Mid cap and the BSE Small cap also notched gains of 1% and 0.5% respectively. Gains were largely seen in banking and auto stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 55.04 to the dollar at the time of writing.

Pharma stocks closed mixed today. While Glenmark and Dr.Reddy's (NYSE:RDY) closed firm, Ranbaxy (OTC:RBXZF) and Lupin were at the receiving end. As per a leading business daily, Dr.Reddy's has launched Ropinirole Hydrochloride XR (extended release) tablets in the U.S. generics market. This drug is the generic version of SmithKline Beecham's Requip XL and had reported sales of around US$ 58 m for the 12 months period ended March 2012 according to IMS Health. The drug is used for treating Parkinson's disease. This is a positive for the company and will enable it to enhance revenues from the highly competitive U.S. generics market where a continuous launch of new products is necessary for growth. Dr.Reddy's especially has embarked on a strategy of focusing on products with limited competition so as to garner higher revenues and profits.

Cement stocks also closed mixed today. While Madras Cements and Mangalam Cement found favour, Ultratech Cement and Ambuja Cement closed in the red. As per a leading business daily, cement prices have gone up by Rs 10-15 to Rs 300 a bag in select regions in a scenario where demand recovery remains uncertain. However, prices in Maharashtra remained stable at Rs 300 a bag, as the south-west monsoon is expected in the next few days. The rise in operational cost and freight rates has compelled companies to increase prices. Domestic coal prices increased by 60%, while Railways also revised its rates higher in the March quarter. Whether this hike can be sustained remains to be seen as demand and consequently cement sales could fall during the monsoon season. The Competition Commission of India had alleged 39 cement companies for influencing cement prices by forming cartels. Though the final report is not out yet, there are chances that guilty companies could be fined. This could have a negative impact on cement prices going forward.