Asian stock markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.80% while the Hang Seng is down 0.43%. The Nikkei 225 is trading down by 0.34%. Over the weekend, US stocks closed with gains. Technology stocks led the S&P 500 and Nasdaq to record closing highs on Friday, with the S&P ending above 2,600 points for the first time.
Back home, India share markets have opened the day on a negative note, weighed by banks after the S&P retained its India's rating at BBB- and outlook stable. The BSE Sensex is trading lower by 79 points while the NSE Nifty is trading lower by 32 points. The BSE Mid Cap index opened down by 0.3% while BSE Small Cap index opened the day on a flat note.
Sectoral indices have opened the day on a mixed note with consumer durables sector and realty sector witnessing maximum buying interest. While PSU stocks and information technology stocks have opened the day in the red. The rupee is trading at 64.73 to the US$.
Automobile stocks opened the day on a mixed note with Tata Motors DVR & Ashok Leyland leading the gains. As per an article in the Livemint, Mahindra & Mahindra (M&M) is eyeing the American car market with its South Korean subsidiary exploring possibilities in the sports utility vehicle (SUV) segment.
One shall note that the company this week opened a new US$ 230 million plant in Detroit, which got its first automotive production facility in 25 years. The automotive plant plans to manufacture off-loaders, the first lot of which is expected by early next year.
Reportedly, the entry into the US car market is likely to be through the South Korean SsangYong Motor Company, which is a subsidiary of M&M.
Further, Mahindra, a well-known brand of tractors in the US, has emerged over the years as the third largest seller of tractors in America.
The Detroit plant brought US$230 in investment, and another US$600 million is planned by 2020. It employs 250 people now, and 400 more jobs are likely to be created by 2020. The group has one billion dollars in investment in America now and plans to double it over the next five years.
M&M share price opened the day up by 0.2%.
Moving on to the news from pharma sector. As per an article in a leading financial daily, Sun Pharmaceutical Industries is recalling two batches of its oral diabetes medicine Riomet in the US due to a microbial contamination.
Reportedly, the contamination was discovered during sample preparation for a study test. It clarified that the Riomet drug is made for the company by a contract manufacturer.
Use of the drug could raise the risk of infection, particularly in patients with weaker immune systems, the company stated. It added that the "most plausible" portal of entry for the contaminant would be the respiratory tract where it could cause pneumonia or sinusitis.
However, the drugmaker has not yet received reports of any adverse events related to the drug. The recall is being conducted with the knowledge of the US Food and Drug Administration (USFDA), the reports noted.
Speaking of blips, the BSE Healthcare Index has been going through more than a blip.
Price to Earnings Ratio (PE) of Top Pharma Companies
Domestic and export markets have both been challenging. Government regulations on branded generics have proved a roadblock in domestic markets. In developed markets, stringent USFDA checks on manufacturing plants along with price erosion in generics have eroded profitability.
There is a structural change taking place in the sector overall as to how business is done and will be done in the future. The pharma sector always traded at premium valuations in the past. It was labeled an 'evergreen' sector. Any small blip was considered an opportunity to buy.
It's important to understand every business has its ups and downs. This is where valuations can help. Here's what Kunal Thanvi, our research analyst, recently wrote about the sector:
- "Pharma companies which can adapt to these changes will thrive in the long run. The uncertainties highlight it important to be stock specific in the sector. It is crucial to look for companies with the competence and staying power to overcome the challenges."
Sun Pharma share price opened down by 1.4%.
Comments
Log in or sign up to join the conversation.