Indian share markets traded on a positive note during closing hours and ended the day higher. Gains were largely seen in the IT sector and oil & gas sector, while metal stocks and healthcare stocks witnessed selling pressure.
At the closing bell, the BSE Sensex stood higher by 159 points (up 0.5%) and the NSE Nifty closed higher by 57 points (up 0.5%). The BSE Mid Cap index ended the day up by 0.3% while the BSE Small Cap index ended the day up by 4%.
Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood down by 0.2% and the Nikkei was trading up by 0.6%. The Shanghai Composite stood lower by 0.1%.
European markets were trading on a positive note. The FTSE 100 was down by 0.1%. The DAX was up by 0.2% while the CAC 40 was up by 0.1%.
The rupee was trading at 70.72 to the US$ at the time of writing.
In the news from the pharma space, Lupin share price was in focus today as the company said it has received an observation in the establishment inspection report (EIR) given by the United States Food and Drug Administration (USFDA) for its Tarapur facility in Maharashtra.
Lupin share price ended the day up by 0.4%.
You can read Lupin Q2FY19 result analysis and Lupin annual report on our website.
In another news, Alembic pharma share price was also in focus today as the company received approval from the US health regulator for Temazepam capsules, used for treatment of insomnia.
The approved abbreviated new drug application (ANDA) is the therapeutic equivalent to the reference listed drug product (RLD) Restoril Capsules.
Speaking of drug approvals, note that Indian pharma companies catering to the US markets are breathing a sigh of relief. After being adversely affected by import bans and the suspension of new drug approvals from manufacturing facilities in the past three years, there has been a sharp pick-up in new drug approvals in FY17.
Even the total filings of abbreviated new drug applications (ANDAs) for generic drugs rose to 1,292 in FY17 from 852 in the previous year. Faster approvals expedite the commercialization of product pipelines of domestic pharma companies spurring growth. At the same time, however, it has raised the intensity of competition resulting in pricing pressures. The price erosion has been further compounded by a consolidation among US distributors and the decline in the number of products going off-patent over the past few years.
In other words, acceleration in generic drug approvals is like a double-edged sword. The growth boost can be quickly offset by the ensuing pricing pressures.
Pharma companies that invest in creating a pipeline of complex generics or building competencies in alternative dosage forms are better equipped to tackle the changing dynamics in the US generics market.
Moving on to the news from the commodity space, oil prices witnessed selling pressure depressed by record Saudi Arabian production even as the kingdom tried to persuade other exporters to agree output cuts ahead of an OPEC meeting next week.
Saudi Arabia raised oil production to an all-time high this month, pumping 11.1 million to 11.3 million barrels per day (bpd).
Oil prices have lost almost one-third of their value since early October, weighed down by an emerging supply overhang and widespread financial market weakness.
Energy importers like India and South Africa will benefit meanwhile oil producers such as Russia and Saudi Arabia will hurt.
US President Donald Trump has put pressure on Saudi Arabia, OPEC's de-facto leader, not to cut production.
Traders are now awaiting the outcome of the Group of 20 (G20) meeting in Buenos Aires and the result of a meeting of the Organization of the Petroleum Exporting Countries (OPEC).
Speaking of crude oil, India's crude oil production was lower by 4.2% in September 2018 as compared to last year, as can be seen from the chart below.
India's Increasing Crude Oil Demand Supply Gap
The worrying factor is this was the lowest production this year.
Here's what Tanushree Banerjee wrote about it in one of the editions of The 5 Minute WrapUp...
- Comparing domestic production with the crude oil processed by refineries gives an idea of the demand supply gap. Low domestic production as compared to the demand for crude oil places a huge burden on India's import bill.
Rising crude oil prices could have severe implications. Rising inflation. Rising interest rates. Pressure on the government to cut excise duty, thereby impacting its revenues.
We have seen some of this play out. With elections around the corner, expect a lot of subsidies on fuel prices. This is bound to worsen India's fiscal deficit further.
It would be interesting to see how this pans out. Meanwhile, we will keep you updated on all the developments from this space.
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