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After trading on a flat note in the noon session, Indian share markets witnessed buying momentum in the afternoon session ahead of exit polls after the second phase of Gujarat elections today.
At the closing bell, the BSE Sensex closed higher by 194 points and the NSE Nifty finished higher by 59 points. The S&P BSE Mid Cap finished up by 0.1% while S&P BSE Small Cap finished down by 0.3%. Gains were largely seen in energy sector, bank sector and FMCG sector.
Asian stock markets finished lower today with shares in China leading the region. The Shanghai Composite is down 0.32% while Japan's Nikkei 225 is off 0.28% and Hong Kong's Hang Seng is lower by 0.19%. European markets are lower today with shares in Germany off the most. The DAX is down 0.27% while France's CAC 40 is off 0.23% and London's FTSE 100 is lower by 0.17%.
Rupee was trading at Rs 64.27 against the US$ in the afternoon session. Oil prices were trading at US$ 56.59 at the time of writing.
As per an article in The Economic Times, Torrent Pharmaceuticals Limited announced that it has completed acquisition of branded business of Unichem Laboratories Limited for India and Nepal, including its Sikkim manufacturing facility, on a going concern basis by way of slump sale.
This transaction was in pursuance of the definitive binding agreement entered into between Torrent and Unichem on November 3, 2017.
Lupin share price finished up by 1% on the BSE. The company received final approval for its Tydemy (Drospirenone, Ethinyl Estradiol, and Levomefolate Calcium Tablets, 3 mg/0.03 mg/0.451 mg and Levomefolate Calcium Tablets, 0.451 mg) from the United States Food and Drug Administration (USFDA) to market a generic version of Safyral Tablets of Bayer HealthCare Pharmaceuticals Inc.
In another development, Cadila Healthcare's wholly owned subsidiary Zydus Pharmaceuticals (USA) Inc. has received the final approval from the United States Food & Drug Administration (USFDA) to market Pramipexole Dihydrochloride Extended-Release Tablets. The drug is indicated to treat signs and symptoms of Parkinson's disease (PD).
The group also received the final approval from the USFDA to market Nitrofurantoin Capsules USP (macrocrystals), which is indicated to treat acute uncomplicated urinary tract infections. Both the drugs will be manufactured at the group's formulations manufacturing facility at Moraiya, Ahmedabad.
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The group now has more than 175 approvals and has so far filed over 300 ANDAs since the commencement of the filing process in FY 2003-04.
Cadila Healthcare share price finished the day up by 0.3%.
In news from the economy, following the trend of Consumer Price Index (CPI), India's annual rate of inflation based on wholesale prices too rose in the month of November, due to increasing prices of food and fuel products.
The index rose for the second consecutive month, after easing in the month of September to 2.60%. According to the data released by the Ministry of Commerce & Industry, the wholesale price inflation (WPI) surged to 3.93% in November 2017 from 3.59% in October 2017 and 1.82% during the corresponding month of the previous year.
Build up inflation rate in the financial year so far was 2.74% compared to a build-up rate of 3.90% in the corresponding period of the previous year.
In another development, the Reserve Bank of India's (RBI) latest data has showed that India's current account deficit (CAD) doubled to 1.2% of gross domestic product (GDP) or US$7.2 billion in July-September, from 0.6% of GDP or US$3.4 billion reported in the same period a year ago.
The RBI further in its release said that the widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit brought about by a larger increase in merchandise imports relative to exports. India's trade deficit increased to US$74.8 billion in H1 of 2017-18 from US$49.4 billion in H1 of 2016-17.
In news from banking sector, Corporation bank share price fell 1.5% after it was reported in the Economic Times that The Reserve Bank of India has imposed certain restrictions on Corporation Bank to carry out banking activities as its share of bad loans rose sharply.
The government-owned bank said the RBI has triggered prompt corrective action (PCA) against it in view of high non-performing loans and requirement to raise capital. This makes Corporation Bank the eighth lender to face restrictions in a span of 10 months.
Once PCA is triggered, the bank faces restrictions on expenses such as on opening branches, recruiting staff and giving increment to employees. It can disburse loans only to those companies whose borrowing is above investment grades.
Meanwhile, credit-deposit ratio, a.k.a. CD Ratio has been steadily increasing over the past one year. This ratio shows how much a bank lends out of the deposits it has mobilized. This ratio was below 70% in November 2016, when demonetization resulted in a flood of deposits while lending slowed down.
Deposit growth and bank credit growth impacts the CD ratio. Bank credit growth rate is continuously improving and achieved 9.6% growth in November 2017. Although the base effect may have played a part in making, the current growth numbers look better. Nevertheless, the rise in bank credit growth will be positive for India's banking sector facing lower loan demand and severe capital constraints.
Over the past five years, private capex was stalled because of high leverage and weak capacity utilization levels. However, the above chart shows early signs of revival of capex cycle.
Moving on to news from automobile sector. Mahindra & Mahindra (M&M) share price finished on an encouraging note (up 1.4%) after it was reported that the company's wholly owned subsidiary - Mahindra Overseas Investment Company (Mauritius) (MOICML) has executed a sale of 64,50,000 shares representing 5% of the share capital of CIE Automotive S.A.
CIE Automotive S.A. is incorporated in Spain and quoted on the Madrid and Bilbao Stock Exchanges at an average gross price of Euro 23.50 per share, aggregating euro 151.58 million. The sale has been executed on the stock exchange.
Following the sale, MOICML's shareholding in CIE Automotive S.A. would come down to 7.435% of its share capital. This transaction will facilitate diversification of Investor base of CIE Automotive S.A. MOCIML would utilize the sale proceeds, inter alia, for part re-payment of its debt and/or for declaration of Dividend or for any other purpose, as may be decided by the Board of MOICML.
Last time we reviewed the stock it had broken out of the falling trendline (red line). But it was trading very close to its life high which usually acts as a good resistance point. As a result, the stock fell nearly 9% from that point to touch a low of 2,531.
Today, it plunged 3% with strong volumes. But overall, the stock is trading in an uptrend. It did not make a lower low since November 2016 indicating strength in the price action.
So will the stock continue to move lower given the recent fall or this is only a temporary setback in the larger uptrend?
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