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Wednesday, 6 January 2016

Markets extend losses as weakness persists

Local equity markets were seen diving further deep into the red as traders resorted to profit booking ahead of May series expiry. On the global front, other key Asian markets, with an exception of KLSE Composite, which was up by 0.18% were trading in the red as concerns of debt worries in Europe weighed on the sentiments; while the US index futures too were trading in the negative territory at this point of time. Back home, investors are eagerly awaiting the results of Tata Steel, Cairn India and Coal India, who are going to announce their results today. On the sectoral front, most of the counters are trading in the red with realty, information technology, capital goods, oil & gas and power space the worst hit. However, consumer durables and healthcare counters managed to stay in the green. Meanwhile, broader indices which were see-sawing earlier in the day have slipped into the red with the BSE Mid-cap and Small-cap indices loosing around 0.43% and 0.18%, respectively. The market breadth on the BSE was negative; the losers thrashed the gainers in a ratio of 1292:1023 while 109 shares remained unchanged.
The BSE Sensex declined 128.66 points or 0.71% at 17,883.31. The index has touched a high of 17,976.36 and a low of 17,882.12, respectively.
The BSE Mid cap and Small-cap indices dipped 0.43% and 0.18%, respectively.
The top losers on the BSE sectoral space were Realty down 1.66%, Information Technology (IT) down 1.50%, TECk down 1.30%, Capital Goods (CG) down 0.88% and Oil & Gas down 0.75%; while Consumer Durables (CD) up 0.72% and Healthcare (HC) up 0.19% were the only gainers in the BSE sectoral space.
The top losers on the Sensex were DLF down 4.09%, RCom down 2.06%, Tata Power down 1.97%, TCS down 1.96% and Bajaj Auto down 1.93%.
On the flip side, Jindal Steel up 1%, HDFC up 0.38%, ITC up 0.37% and Tata Motors up 0.34% were the only gainers 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 lost 35.80 points or 0.66% at 5359.05.  The index has touched a high and a low of 5389.10 and 5356.15, respectively.
The top gainers on the Nifty were Sun Pharma up 2.17%, Cairn India up 1.32%, Jindal Steel up 1.04%, Kotak Mahindra Bank up 0.79% and ITC up 0.51%.
On the flip side, DLF down 4.06%, BPCL down 2.24%, Tata Power down 2.13%, Rel Capital down 2.09% and Bajaj Auto down 1.94% were the major losers on the index.
Rest of the Asian markets, with an exception of KLSE Composite, which was up by 0.18% were trading in the red. Shanghai Composite dropped 0.52%, Hang Seng declined 0.78%, Jakarta Composite dipped 0.28%, Nikkei 225 shed 0.62%, Straits Times slipped 0.49%, Seoul Composite plunged 1.24% and Taiwan Weighted lost 0.34%.

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