Indian share markets pared losses to turn positive in the afternoon session. At the closing bell, the BSE Sensex closed higher by 45 points. While, the NSE Nifty finished higher by 10 points. Meanwhile, the S&P BSE Midcap Index and S&P BSE Small Cap Index ended up by 0.4% & 0.8% respectively.
Among the sectoral indices, metal stocks and information technology stocks finished in red. While, power stocks and realty stocks gained the most.
Overseas, Asian stock markets finished lower today with shares in China leading the region. The Shanghai Composite is down 0.94% while Hong Kong's Hang Seng is off 0.60% and Japan's Nikkei 225 is lower by 0.24%. European markets are higher today with shares in Germany leading the region. The DAX is up 0.38% while London's FTSE 100 is up 0.15% and France's CAC 40 is up 0.03%.
The rupee was trading at Rs 64.69 against the US$ in the afternoon session.
Ashok Leyland share price surged 4.2% after the company inked a pact with its long-standing Japanese partner Hino to jointly develop BS-VI compliant engines.
In the news from the economy. Standard & Poor's (S&P) retained its outlook on India as stable, and kept the rating unchanged at BBB-.
While the agency retained its rating on India, it also lauded the Modi-led government's fiscal consolidation drive under which multiple reforms were taken towards the path of a favorable economy including the Goods and Services Tax (GST), Insolvency and Bankruptcy Code, 2016 and others.
The report noted that despite two quarters of weaker-than expected growth, Indian economy will grow robustly in 2018-20, and foreign exchange reserves will continue to rise.
Further, it stated that over the next two years, India's growth will remain strong and fiscal deficits will remain broadly in line with the expectations.
While upward pressure on ratings could be created with an improvement of the economic reforms, downward pressure could emerge if GDP growth disappoints, fiscal deficit rises or political will to maintain the reform agenda loses momentum, the reports noted.
It states that confidence and GDP growth in 2017 were shaken by the demonetisation exercise, and the new taxation scheme, which resulted in dampening of growth.
However, the report noted that growth in the medium term will be supported by the bank recapitalisation plan and public-sector-led infrastructure investment, which is expected to stimulate economic activity along with robust private consumption.
Against the backdrop of the planned ramp-up in public-sector-led infrastructure investments, as well as persistent deficits at the state level, the company noted that the large general government debt load and India's overall weak public finances continue to constrain the ratings.
The ratings on India reflect the country's strong GDP growth, sound external profile, and improving monetary credibility. These strengths are balanced against vulnerabilities stemming from the country's low per capita income and relatively high general government debt stock, net of liquid assets.
Moreover, bond yields too rose 3 basis points to 7.03% on the back of the S&P rating review, though investors are now awaiting key macrodata due later this week for cues.
It's pertinent to note that India's public debt is mostly funded internally. While scheduled commercial banks, insurance companies, provident funds, and RBI invest in 85% of the government bonds, there is a miniscule 4% participation by the overseas investors.
The Irony of India's Bond Market
What is ironical is that despite a benign business environment, the bond yields in India have been ascending. Since the global financial crisis, India's bond yields have firmed up by a whopping 1.7%, putting it in line with countries like South Africa and Russia whose economies are in a state of mess.
In the short term, India's fiscal deficit is likely to remain high given the initial revenue losses due to GST, higher public spending on infrastructure, and the recapitalisation program for state-run banks. But in the long run, the economic reforms are likely to strengthen the economy and drive growth.
Moving on to the news from pharma sector. As per an article in a leading financial daily, Cadila Healthcare's subsidiary, Zydus Cadila has received the final approval from the United States Food and Drug Administration (USFDA)to market Topiramate Extended-Release Capsules in the strengths of 25 mg, 50 mg, and 100 mg.
The drug is indicated for the treatment of seizures and migraine headaches.
Reportedly, the drug will be manufactured at the group's formulations manufacturing facility at Moraiya, Ahmedabad.
The group now has more than 170 approvals and has so far filed over 310 ANDAs since the commencement of the filing process in FY 2003-04.
Cadila Healthcare share price ended down by 0.6%.
In recent times, pharma companies were bogged down by mounting pressure from US Food and Drug Administration (USFDA) to adhere to quality standards at their manufacturing plants.
In the past three years, the USFDA raised numerous regulatory concerns resulting in import bans and suspension of new drug approvals from facilities of Indian pharma companies. But what has come as a breather is a sharp pick-up in new drug approvals in 2017.
During the period January-July 2017, 129 approvals for generic drugs were made. This is 45% higher from 89 approvals made in the corresponding period last year.
However, as per our research analyst Taha Merchant, the uncertainties make it important to be stock specific in the sector. It is important to look for companies that have the competence and staying power.
And here's a note from Profit Hunter:
Mothersons Sumi is among the most active stock in the market today. Let's have a look at its chart.
The stock bottomed out with the broader market indices at 137 in February 2016. It traded in a strong uptrend to touch a life-time high of 346 in August 2017. It found resistance near the 340 level in September and October as well. However, it finally broke above this resistance to achieve a fresh life-time high of 374 earlier this month.
It corrected for a while to find a strong support near the 340 level a day before yesterday. The previous resistance now acted as support for the stock. Today, it is up 4% with strong volumes.
Can we expect this stock to rise above it's current life high? Let's wait and watch...
Mothersons Sumi Rallies 4% for the Day
(Click on image to enlarge)
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