After opening the day in the red, share markets in India witnessed volatile trading activity throughout the day and ended the day in above the dotted line. Sectoral indices traded mixed, with stocks in the energy sector and stocks in the banking sector, leading the gains.
At the closing bell, the BSE Sensex stood higher by 187 points (up 0.6%) and the NSE Nifty closed up by 78 points (up 0.8%). The BSE Mid Cap index ended the day up 1%, while the BSE Small Cap index ended the day up by 0.7%.
The rupee was trading at Rs 73.21 against the US$ in the afternoon session. Oil prices were trading at US$ 75.81 at the time of writing.
Asian stock markets finished mixed. As of the most recent closing prices, the Hang Seng was down by 0.3% and the Shanghai Composite was up by 0.3%. The Nikkei 225 was up by 0.4%. Meanwhile, European markets too were trading on a mixed note. The FTSE 100 was down by 0.4%. The DAX, was down by 0.7% while the CAC 40 was down by 0.6%.
In news from stocks in the FMCG and pharma sector, Zydus Wellness share price was in focus today after it was reported that the company is planning to acquire Heinz India.
Zydus Welness, a part of the Ahmedabad-headquartered Zydus group, announced plans to acquire Heinz India, known for its brands like Complan, Glucon D, Nycil and Sampriti Ghee.
The company said it had entered into a definitive agreement to acquire the subsidiary of Kraft Heinz, Heinz India Private Limited, jointly with Cadila Healthcare Ltd., at a valuation of Rs 45.9 billion.
Apart from the four iconic brands, Heinz India's business comprises two large manufacturing facilities in Aligarh and Sitarganj and teams devoted to operations, research, sales, marketing and support. Heinz India also has a strong network of over 800 distributors and more than 20,000 wholesalers covering 29 states. This valuation includes net working capital of Rs 400 million, cash of Rs 150 million and assumes no debt. The transaction was expected to close in the fourth quarter of 2018-19, subject to regulatory approvals, Zydus Wellness said in a media statement.
For the four brands, Heinz India recorded revenues of about Rs 11.5 billion and EBITDA of about Rs 2.3 billion for the 12 month period ending 30 June 2018. Following this acquisition, Zydus Wellness will have consolidated revenues of about Rs 17 billion, according to the media release.
The transaction is proposed to be financed by a mix of equity and debt.
Zydus Cadila share price ended the day down 4.3%.
The Roller Coaster Ride of the BSE Healthcare Index
The BSE Healthcare Index has been on a roller coaster ride in the past few years. The period from 2012 to 2015 saw the index go up more than three times.
Since then it has been a painful ride downwards.
Pre-2015, pharma companies enjoyed a fairytale ride in the US market. Low labor costs, good chemistry skills, along with efficiency, ensured Indian companies could copy innovator drugs to make generic drugs at a fast pace.
The generic business had lucrative margins for all major pharma players. But the party did not last long. In the quest to supply drugs quickly, they compromised on quality at their manufacturing facilities.
No wonder, the US regulatory authority (USFDA) took strict action. Sun Pharma received a warning letter for its Halol manufacturing facility in 2015. It was like a bolt out of the blue. Since then, the downward spiral began and has continued to date.
Lupin was also issued a warning letter for two of its plants last year.
These regulatory issues coupled with price erosion in US markets has impacted the business of major pharma players.
The recent regulatory clearance for Sun Pharma's Halol plant has led to hopes of a revival in the sector.
The stock has an impeccable track record. Unlike other pharma players, it has grown without much exposure to the US and European markets. In fact, entry in to the US market could be the next big trigger for the stock.
It has also faced recent headwinds in some of its geographies. But we are confident the management is more than capable of coming out of this situation strongly.
Moving on to news from stocks in the IT sector. Infosys share price was in focus today after the company partnered with R3 to widen its blockchain solutions reach.
Finacle, a part of Infosys subsidiary EdgeVerve, said it has partnered with enterprise blockchain software firm R3 to enhance reach for its blockchain-based solutions for banks and other institutions.
This partnership would enable banks to easily access and deploy Finacle's blockchain solutions on Corda, R3's open-source blockchain platform.
With this partnership, banks will be able to leverage Finacle's award-winning blockchain solutions on the Corda platform to accelerate their blockchain based business re-imagination.
While Finacle Trade Connect is a blockchain-based trade finance solution that connects banks, trade partners and corporates on a unified distributed network; Finacle Payments Connect is a blockchain-based solution that enables real-time payments processing on a permission payments network.
Finacle Payments Connect helps banks automate payments processing within their corresponding banking relationships.
The company said banks can automate payments and trade process across key business partners and customers to accelerate the speed of business; drive operational efficiencies and minimize risk, using these solutions. Infosys share price ended the day down 1.2%.
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