India Markets Wednesday Wrap-Up: No Respite From Selling Pressure

by: Equitymaster

Indian stock markets languished in the red throughout the trading session today on the back of persistent selling pressure 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 165 points (down 1%), the NSE-Nifty closed lower by around 46 points (down 1%). The BSE Midcap and BSE Small-Cap were not spared either as they closed lower by 0.6% and 0.7%, respectively. Barring consumer durables and FMCG stocks, losses were seen across sectors.

As for global markets, Asian indices closed mixed today while European indices opened on a mixed note. The rupee was trading at Rs 45.36 to the dollar at the time of writing.

Bharat Forge announced its results for the fourth quarter and year ended March 2011. Stand-alone net sales were up by 59% YoY during FY11, led by a 73% YoY and 50% YoY increase in exports and domestic markets, respectively. Volumes grew by 47.5% during the year on the back of the buoyancy in the automotive market globally and strong off-take from non-automotive facilities. Realizations also improved driven by better product mix and value addition. Growth was seen across geographies as well notably India, US, Europe and Asia-Pacific. Operating margins improved 0.8% YoY to 24.3% during the year on account of increase in capacity utilization and change in product mix. Net profits rose by 144.5% YoY during the year led by strong performance at the operating level and higher other income. The stock closed higher today.

Pharma stocks closed mixed today. While Piramal Healthcare and Lupin found favor, Glenmark and Dr. Reddy's (NYSE:RDY) closed in the red. Pharma major Glenmark has entered into a settlement and license agreement with Astellas Pharma (OTCPK:ALPMY) with respect to the generic version of the latter's drug "Locoid Lipocream." It must be noted that Glenmark had earlier challenged the patent on this drug under a Para IV filing but has now chosen to settle the litigation with Astellas. Thus, as per the terms of the agreement, Glenmark will be permitted to market and distribute the generic version of this medicine under a royalty-bearing license from Astellas in the U.S. near the end of 2013. Moreover, Glenmark believes that it should get 180-day exclusivity on the drug as it is the first generic company to file an ANDA for the product. Locoid Lipocream had sales to the tune of U.S. $38 m for 2010. This is a positive development for the company as settling patent suits eliminates the need for further expenses and provides some sort of revenue visibility as far as the drug is concerned. Moreover, the exclusivity window will also play a role in enhancing Glenmark's revenues and profits from the highly competitive U.S. generics market.