Share markets in India are presently trading on a positive note. Sectoral indices are trading mixed with stocks in theand witnessing maximum buying interest while and are witnessing selling pressure.
The BSE Sensex is trading up by 296 points (up 0.8%), while the NSE Nifty is trading up by 71 points (up 0.7%). The BSE Mid Cap index and the BSE Small Cap index are trading on a flat note.
The rupee is trading at Rs 70.65 against the US$.
In the news from the economy. In a bid to meet durable liquidity requirements of the financial markets, the Reserve Bank of India (RBI) has decided to infuse Rs 400 billion additional liquidity into the system through purchase of government securities under open market operations (OMOs) in December 2018.
Reportedly, this OMO amount is indicative with the RBI retaining the flexibility to change it, depending on the evolving liquidity and market conditions.
The RBI had announced to inject Rs 400 billion into the system in November.
Note that, it has already infused Rs 300 billion into the system, while the rest Rs 100 billion liquidity would be pumped in through auction on 29 November 2018, through multi-security auction using the multiple price method.
The central bank already, in October, injected Rs 360 billion into the system through OMOs.
The RBI had earlier stated that the system liquidity will move into deficit in the second half of FY19 and the evolving liquidity conditions would determine its choice of instruments for both transient and durable liquidity management.
OMOs are the tools which can be used to either inject or drain liquidity from the system.
It is employed to adjust rupee liquidity conditions in the market on a durable basis.
The OMO operation will help ease tight liquidity situation triggered by series of default by group companies of IL&FS.
Speaking of the liquidity crisis triggered by IL&FS, Tanushree Banerjee, co-head of Research at Equitymaster, rightly pointed out in The 5 Minute WrapUp, that rating agencies were late to ring the alarm bells this time as well.
Here's what Tanushree wrote:
- "Now, no doubt, rating agency ICRA kept upholding IL&FS' AAA rating until August 2018. But the rating documents over the years, that lay down financial numbers, clearly showed a risky trend.
Even as IL&FS Financial Services' debt to equity ratio shot up over the past six years, the ratio of NPA to net-worth kept ballooning. And as I have written earlier for PSU banks, the NPA to net-worth ratio is something I stay extremely wary of.
For IL&FS Financial Services, the NPA to net-worth ratio rang alarm bells by 2016 itself."
Rising NPAs and Debt - Early Indicators of IL&FS' Liquidity Crisis
Going forward, how the government's capital infusion helps resolve the liquidity issues remains to be seen.
Moving on to the news from pharma sector. As per an article in a leading financial daily, Dr. Reddy's Laboratories has launched Chlorthalidone Tablets USP, 25 mg and 50 mg, approved by the US Food and Drug Administration (USFDA).
It is a therapeutic equivalent generic version of Hygroton (chlorthalidone) Tablets.
The Hygroton brand and generic had US sales of around US$122 million MAT for the most recent twelve months ending in September 2018, according to IMS Health.
Further, Dr. Reddy's Chlorthalidone Tablets, USP are available in 25 mg tablets in the bottle-count sizes of 100 and 1000, and 50 mg tablets in the bottle-count size of 100.
To know more about the company, you can access Dr. Reddy's Q1FY19 result analysis and Dr. Reddy's Stock Analysis on our website.
At the time of writing, Dr. Reddy's share price was trading down by 1%.
To know what's moving the Indian stock markets today, check out the most recent share market updates here.
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