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Positive trade persists over Dalal Street
Sep-19-2024

A positive trade continued over the Dalal Street in early afternoon deals, with both Sensex and Nifty holding notable gains, on the back of buying at Auto and FMCG counters. Traders got relief, amid reports that food secretary Sanjeev Chopra said that prices of major agricultural commodities such as wheat, rice, edible oil and sugar will not see a sharp increase in this festive season, and added that the government will partially restore the distribution of 3.5 million tonnes of wheat under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) which it had replaced with rice in the past two years due to lower production. Besides, the Cabinet approved continuation of the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) with an allocation of Rs 35,000 crore, to be used for the procurement of agriculture commodities such as pulses, oilseeds and copra at minimum support prices. It has also approved the allocation of Rs 24,475 crore to subsidise NPK fertilisers for the rabi season.

On the global front, Asian markets were trading higher after the U.S. Federal Reserve announced a whopping 50 bps rate cut and signaled further policy easing to keep the labor market from slowing too much. However, the Malaysian foreign trade surplus decreased notably in August from a year ago as imports grew much faster than exports. The data from the statistical office showed that the trade surplus shrank to Malaysian ringgit (MYR) 5.7 billion in August from MYR 17.3 billion in the same month last year. The surplus also declined from MYR 6.4 billion in July.

The BSE Sensex is currently trading at 83329.08, up by 380.85 points or 0.46% after trading in a range of 83097.22 and 83773.61. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.91%, while Small cap index down by 1.29%.

The top gaining sectoral indices on the BSE were Auto up by 0.44%, FMCG up by 0.43%, Bankex up by 0.43%, Consumer Durables up by 0.40% and Utilities up by 0.23%, while Telecom down by 1.95%, Oil & Gas down by 1.86%, Capital Goods down by 1.74%, Industrials down by 1.70% and PSU down by 1.43% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.52%, Bharti Airtel up by 3.13%, Nestle up by 2.04%, Maruti Suzuki up by 1.45% and Titan up by 1.37%. On the flip side, Adani Ports & SEZ down by 1.77%, TCS down by 1.00%, Larsen & Toubro down by 0.95%, HCL Tech. down by 0.89% and Tata Steel down by 0.80% were the top losers.

Meanwhile, CRISIL Ratings in its latest report has said that the Indian pharmaceuticals sector is likely to log a revenue growth of 8-10% this fiscal (FY25), after around 10% growth last year, supported by healthy exports to regulated markets, recovery in exports to semi-regulated markets and steady domestic demand. The resultant improvement in operating leverage along with easing pricing pressure in the US generics market will improve operating margins by 70-80 basis points (bps) to around 22.5% this fiscal.

This will be on the back of an increase in margins by 100 bps last fiscal. Continued strong annual cash generation and low financial leverage, will support ‘stable’ credit profiles of players even as companies continue to pursue acquisitions in targeted therapeutic areas.

A CRISIL study of 190 drug makers, accounting for about half of the Rs 4.1 lakh crore market last fiscal, indicates as much. The pharmaceutical sector revenue pie is split almost equally between domestic sales and exports. Domestic formulation revenue comes equally from chronic and acute therapeutic segments. As for exports, formulations and bulk drugs contribute around 80% and around 20%, respectively. For formulations, 58% of exports is to the regulated markets and 42% of exports is to the semi-regulated markets. 

According to the report, domestic revenue is likely to see growth of 7-9% this fiscal, primarily price-driven, with volume growth to be backed by new product launches. Price growth will be led by the non-NLEM (National List of Essential Medicines) portfolio, as price growth for NLEM portfolio shall remain muted, due to minimal change in Wholesale Price Index (WPI) last fiscal. CRISIL is anticipating that the chronic segment to be the key revenue contributor amid increasing lifestyle-related diseases and continued emphasis on health awareness since the pandemic. Steady growth in revenues, healthy operating profits and stable working capital cycle at around 50 days will keep cash flows strong. The financial risk profile of the CRISIL-rated players remains comfortable, with debt to earnings before interest, tax, depreciation and amortisation ratio at 0.9 time and the interest coverage at over 12 times in fiscal 2025.

The CNX Nifty is currently trading at 25445.95, up by 68.40 points or 0.27% after trading in a range of 25390.20 and 25611.95. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were NTPC up by 3.38%, Bharti Airtel up by 2.94%, Nestle up by 1.89%, Maruti Suzuki up by 1.36% and Titan up by 1.31%. On the flip side, BPCL down by 2.71%, ONGC down by 1.93%, Adani Ports & SEZ down by 1.79%, Shriram Finance down by 1.37% and Adani Enterprises down by 1.29% were the top losers.

All Asian markets were trading higher; Hang Seng advanced 404.16 points or 2.29% to 18,064.18, Jakarta Composite gained 56.37 points or 0.72% to 7,885.51, Shanghai Composite strengthened 19.02 points or 0.7% to 2,736.30, Straits Times rose 38.59 points or 1.07% to 3,631.01, KOSPI increased 5.39 points or 0.21% to 2,580.80, Nikkei 225 surged 775.16 points or 2.09% to 37,155.33 and Taiwan Weighted added 363.85 points or 1.65% to 22,042.69.
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