After opening the day in green share markets in India witnessed positive trading activity and are presently trading above the dotted line. All sectoral indices are trading on a positive note, with stocks in the consumer durables sector and stocks in the pharma sector witnessing maximum buying interest.
The BSE Sensex is trading up by 200 points (up 0.6%) and the NSE Nifty is trading up by 71 points (up 0.7%). Meanwhile, the BSE Mid Cap index is trading up by 0.6%, while the BSE Small Cap index is trading up by 1%. The rupee is trading at 67.32 to the US$.
In news from stocks in the banking sector. Punjab National Bank (PNB) share price is in focus today, after the scam-hit lender plans to divest stakes in its subsidiary PNB Housing Finance and other entities like BSE, ICRA and Crisil depending on market conditions.
The shedding of a stake in non-core assets is a part of PNB's reforms agenda adopted in January this year.
PNB Housing Finance is one of the main subsidiaries of PNB engaged in the business of providing housing and construction loans. The lender had a stake of nearly 33% percent in the subsidiary on March 31, 2018.
At the time of writing, PNB share price was trading up by 3.3, while PNB Housing Finance share price was trading down by 3.2%.The disinvestment is in line with the reforms agenda unveiled in January for public sector banks which are facing mounting bad loans and frauds like the Rs 130 billion scam at PNB, carried out by diamond Nirav Modi and his associates.
PSBs Struggle Despite Government Help
Public Sector Banks (PSBs) have had a difficult year, to put it mildly.
After the euphoria of recapitalization, bad loans have come to haunt them. Post the Gitanjali Gems fiasco, PSBs are yet to fully recover from its impact.
This underperformance was despite the huge boost they got from the government last year. On 24 October 2017, the government announced a Rs 2.11 trillion public sector bank (PSB) capitalization plan. This move was aimed at reviving the PSBs from the bad loan mess.
The next day was a field day for investors in PSBs. PSB stocks went up between 30% and 47%. Despite this, the return in the year was way below average. PSBs like Punjab National Bank (PNB) has crashed more than 45% over the last one year.
Have we reached the bottom? Or there are more Nirav Modi stories waiting to come out?
We believe, rather than bottom fishing, one should look at banks run by strong management and a differentiated lending strategy available at reasonable valuations.
Moving on to news from stocks in the pharma sector. Cipla share price is in focus today after the pharma major announced a partnership with Eli Lilly to market and distribute the company's diabetes drug in India.
The drug, Basaglar which is an insulin glargine injection will be market in the country after a tie-up with Cipla and Eli Lilly and Company (India) Pvt Ltd, a 100% subsidiary of the US-based firm.
Cipla expects to begin commercializing the drug by the end of this year.
Notably, Cipla is positive on growth in the new financial year and is looking for US$1 billion in consolidated revenues this year.
The drugmaker expects the in-licensing deals with innovator companies, focus on certain therapeutic segments and sales force productivity optimization measures to aid growth in India.
Partnerships such as the one with Eli Lilly is a step in that direction.
In addition, Cipla is also looking at significant investments in R&D to build a strong pipeline, with over 20 targeted filings in FY19.
At the time of writing, Cipla share price was trading up by 1%.
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