Indices bounce back
28 March 2005
The keenly anticipated relief rally saw the Sensex rallying more than 100 points in morning trades. The indices were partly supported by operators covering their short positions ahead of the futures and options settlement due on Thursday. However, the indices gave up part of their gains in the last half an hour as selling emerged at higher levels. Sensex closed at 6511, up 68 points and the Nifty at 2029, up 14 points. Nifty futures are quoting at a 6 point premium to the spot index.
In a very innovative move, Dr Reddy's has roped in the venture capital arm of ICICI Bank to finance its plans to market generic drugs in the US. Indian companies have been filing many new applications for generic drugs and patent challenges in the US recently. Commercialisation of these applications involves considerable financial outlays and associated risks. Under the deal, ICICI Ventures would finance the commercialisation up to $56 million in return for royalty payments as and when the drugs are marketed.
The profitability of major Indian drug companies have been under pressure because of higher spending on research and costs involved in entering developed markets. This deal may help Dr Reddy's to part manage the pressure on profits and take a longer term view. The stock closed more than 2 per cent higher.
Foreign brokerages have been circulating reports among their clients indicating a fresh round of consolidation moves in the Indian pharma industry. These reports suggest that many of the frontline companies including Ranbaxy, Dr Reddy's and Cipla could be take over targets for global pharma majors. Global companies are expanding their research facilities in India in a major way and many of these companies have very strong research capabilities. All frontline pharma stocks closed higher for the day.
ITC has announced plans to invest up to Rs14,000 crore in various businesses in the next few years. The company is positive in its outlook for all its divisions. The investments will go to upgrading and expanding capacities for cigarettes, garments and paper. The company is also looking at a major expansion drive for its hotel division and is repositioning itself as a diversified rather than just a tobacco company. The stock closed marginally lower after trading firm in the morning.
There are reports that Tata Motors is looking to sell its passenger vehicles in the Malaysian market. It already sells commercial vehicles in that country. The stock closed marginally higher while competitor Maruti gained close to 2 per cent.