Sensex Trades 322 Points Up; Auto & IT Stocks Rise

After opening the day on a strong note, the Indian share markets have continued the momentum and are presently trading higher. Sectoral indices are trading in mixed, with stocks in the automobile sector & information technology sector leading the pack of gainers. While realty stocks and PSU stocks are trading in red.

The BSE Sensex is trading higher by 323 points (up 0.9%) while the NSE Nifty is trading higher by 83 points (up 0.8%). The BSE Mid Cap index is trading lower by 0.1% while BSE Small Cap index is trading down by 0.2%. Gold prices, per 10 grams, are trading at Rs 30,090 levels. Silver price, per kilogram, is trading at Rs 39,511 levels. Crude oil is trading at Rs 4,209 per barrel. The rupee is trading at 63.49 to the US$.

In the news from the pharma sector. As per an article in a leading financial daily, Cipla has received final approval for its Abbreviated New Drug Application (ANDA) for Tenofovir Disoproxil Fumarate Tablets, 300mg, from the United States Food and Drug Administration (USFDA).

The tablets are AB-rated generic equivalents of Gilead Sciences' Viread Tablets, 300mg. The tablets are indicated in combination with other antiretroviral (ARV) agents for the treatment of HIV -1 infection in adults and pediatric patients 12 years of age and older.

Reportedly, Cipla is excited to add this important antiretroviral product to its growing portfolio of ARVs in the US. The product will be available for commercial shipment in the US immediately.

Further, these tablets had US sales of approximately US$725 million for the 12-month period ending November 2017.

Speaking of pharma space, the BSE healthcare index was the worst performing sector in 2017. In fact, the sector has underperformed over the past three years.

While 2018 earnings of pharma companies are expected to be better considering the low earnings base in 2017, certain challenges still remain.

Valuations of Top Pharma Companies Still High

The valuations of the top five companies by market capitalization on BSE healthcare tell a different story though. Average Price to Earnings Ratio of the top five companies stands at 36. Considering the headwinds these companies are facing, it certainly seems rich.

Here's what Kunal Thanvi, our Research Analyst has to speak about the sector:

• "An improved earnings performance in 2017 will certainly get these valuations to reasonable levels, provided the share price remains the same. But, the headwinds for the sector still exists."

Quicker ANDA approvals has intensified competition amongst generic players. Also, the recent warning letter to Lupin shows the regulatory overhang hasn't been completely resolved yet.

2018 looks likely to be another challenging year for the sector. The uncertainties make it important to be stock specific in the sector.

In such an environment, it makes sense for investors to be selective while buying stocks. Focus on value and the underlying fundamentals of the business.

So, what is key to identifying potential multibagger stocks? How does one pick them at the right time and ride them to their full potential? How many multibaggers do you really need to achieve the big riches that you desire?

Most importantly, are there any stocks right now that could turn out to be multibaggers? Click here to know everything that you need to know right now about mutlibagger stocks...

In another development, as per an article in The Economic Times, India's deal tally increased last year, driven by consolidation in telecom and record private equity investments.

Reportedly, there were 1,147 deals worth US$60.5 billion last year, including both mergers and acquisitions and private equity transactions. That compares with 1,485 such deals worth US$57.85 billion in 2016.

This momentum was largely driven by big-ticket consolidation across sectors as companies divested distressed assets to reduce debt. On the other hand, corporates with strong balance sheets drove acquisitions to capture the market share and increase competitiveness.

The year saw 411 M&As valued at US$40 billion, continuing the declining trend after peaking in 2015. The fall in the deal tally is mainly due to the absence of multi-billion-dollar deals.

The telecom sector led the M&A deal activity, with six deals in the US$100-million club which cumulatively contributed US$25 billion. This accounts for over 60% of total M&A deal values.

Further, core sectors like banking and pharma also garnered big ticket-deals contributing 14% to the total values. Tech sectors including startups and IT & ITeS witnessed the highest consolidation in 2017, capturing over 40% of the volumes.

With political stability continuing, economic reforms on a fast pace and macroeconomic factors looking positive, 2018 will perhaps be one of the best years for M&A with transaction activity expected to close at an even higher level than 2017, the reports noted.