Local bourses lose some more ground; broader indices trade mixed

Local bourses after getting a soft start have lost some ground in tandem with Asian peers that are reeling under pressure as nagging fears about Europe's spreading debt crisis triggered massive sell off. The volatility has spiked up as the equity market march nearer to the expiry of March month Future & Option series. Local bourses are mainly feeling the heat coming from the Index Heavyweight as the market bellwether - Reliance Industries is trading lower by over 0.50%. Meanwhile, another index heavyweight Infosys also fell by over 1% after company received a subpoena from a grand jury in the US district court that requires the company to provide certain documents and records related the company's sponsorships for and uses of B1 business visas. Besides that, Realty stocks saw deepest cuts after DLF plunged over 4% post reporting nearly 20 per cent fall in net profit for the fourth quarter. On consolidated basis, the group has posted a net profit of Rs 344.54 crore for the quarter ended March 31, 2011 as compared to Rs 426.38 crore for the quarter ended March 31, 2010, down 19%.

On the global front, overnight, the Wall Street closed lower for a third straight day amid continued concerns over the European debt crisis. Meanwhile, all the Asian Indices barring KLSE Composite were trading in the red. The US future indices too were showing a downtick in the screen trade. Back home, the 30 scrip sensible barometer index on Bombay Stock Exchange (BSE) though trading lower over 50 points was at sniffing distance of the physiological 18,000 mark, while the broadly followed 50 share index on National Stock Exchange (NSE) losing over 20 points was trading near its intra-day's low point. The broader indices were showcasing mixed trend similar to the previous trading session. Midcap Index lost over 10% and SmallCap Index enticed a gain of 0.05%. The overall market breadth was in the favour of declines which outpaced advances in the ratio of 1108:1019, while 99 shares remained unchanged.

The BSE Sensex is currently trading at 17,935.17, down by 76.80 points or 0.43%. The index has touched a high and low of 17,976.36 and 17,905.29 respectively. There were 10 stocks advancing against 19 declining ones, while only a stock remained unchanged on the index.

The broader indices were trading mixed; the BSE Mid cap Index lost 0.14% and Small cap index gained 0.05%. 

The only gaining sectoral indices on the BSE were, CD up by 0.81%, PSU up by 0.34%, HC up by 0.32%, FMCG was up by 0.04% and Metal up by 0.03%. While, Realty down by 1.39%, IT down by 0.99%, TECk down by 0.91%, CG down by 0.66% and Oil and Gas down by 0.52% were the top losers on the index.

The top gainers on the Sensex were Jindal Steel up by 0.99%, Tata Motors up by 0.72%, HDFC up by 0.62%, Sterlite Industries up by 0.34% and HDFC Bank up by 0.17%.

On the flip side, DLF down by 3.81%, Tata Power down by 1.50%, Bhari Airtel down by 1.47%, TCS down by 1.42% and L&T was down by 1.29% were the top losers on the index.

Meanwhile, the Indian Pharmaceutical industry has been witnessing phenomenal growth in recent years, driven by rising consumption levels in the country and strong demand from export markets. The pharmaceutical industry in India is estimated to be worth about $10 billion, growing at an annual rate of 9 percent. There are around 10,000 pharmaceutical manufacturers in India, producing bulk drugs and formulations, of which some 7,000 are SMEs, contributing 35 percent of the total domestic turnover of Rs 45,000 crore.

In order to enhance the performance in the domestic and export markets, the small and medium enterprises (SMEs) in the pharma sector are looking for government support on technology upgrade in manufacturing, brand promotion and marketing. The marketing and regulatory constraints are putting pressure on SMEs growth. To overcome this, the SMEs need financial support from the government. The opportunity is mainly in contract manufacturing, for both MNCs operating in India and Indian companies, which are looking to outsource manufacturing activities for the domestic market and focus on exports to regulated markets like the US and Europe. For which the SMEs first have to upgrade their capabilities to comply with manufacturing standards like Good Manufacturing Practices (GMPs) set by the Indian government and the World Health Organization (WHO).

Upgrading facilities according to the WHO-GMP and Indian GMP standards needs liberal funding from the government and some financial incentives, but without so many restrictions. The government has implemented financial assistance programmes like the Credit Linked Capital Subsidy Scheme (CLCSS) for technology up gradation of small-scale industries to enable them to comply with GMP standards with the revised Schedule M norms under the Drugs and Cosmetics Act. Besides, the government also announced a Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) that provides a 5 percent interest subsidy for SMEs to upgrade their facilities to WHO-GMP standards.

The SMEs also face the challenge of eligibility barriers, including fixed turnover limits and ORG rankings set by institutional buyers in their bidding process for medicine procurement. Small enterprises, which mainly rely on government and institutional supplies, could perform well if these restrictions are removed. Further, the government could also provide SMEs with soft loans for brand promotion.

The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. The contribution of SMEs to pharmaceutical units, output, investment, and employment is considerably higher than many other sectors. In the year 2011-12, the Indian domestic pharma market is expected to grow at a compounded annual growth rate (CAGR) of nearly 16%. Export market is also expected to grow much faster than the domestic market.

The S&P CNX Nifty is currently trading at 5,370.00, down by 24.85 points or 0.46%. The index has touched a high and low of 5,389.10 and 5,362.30 respectively. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 2.04%, Kotak Bank up by 1.33%, Jindal Steel up by 1.07%, Cairn India up by 0.93% and Tata Motors up by 0.86%.

DLF down by 3.95%, BPCL down by 1.86%, Reliance Capital down by 1.82%, Bharti Airtel by 1.61% and Tata Power was down by 1.56% were the major losers on the index.

All the Asian markets barring KLSE Composite were trading in the red; Shanghai Composite lost 0.46%, Hang Seng declined 0.55%, Jakarta Composite slid 0.28%, Nikkei 225 slipped 0.37%, Straits Times dropped 0.50%, Seoul Composite  was down by 0.71%and Taiwan Weighted  too was in red down by 0.02%.

On the flip side, KLSE Composite was the only gainer among the Asian pack and was trading up by 0.18%.

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