Like a pendulum...

The benchmark indices are back in the positive backed by some strength in banking, FMCG, oil PSUs, pharma, software and telecom. The sentiment is largely lacklustre. The gains in these sectors are not much and therefore, volatility during the day cannot be ruled out.

The BSE Sensex is trading at 6,623 (up 17 points) and the Nifty is trading at 2,073 (up 4 points). The rupee is trading at Rs 43.73 per US Dollar.

The sentiment among domestic pharma stocks is mixed. While majors such as Dr. Reddy (REDY.BO, news) 's Ranbaxy and Sun Pharma (SUN.BO, news) are marginally up, mid-cap companies like Glenmark and Matrix are seeing investor interest. Divi's Labs, that had been gaining ground in the past week, is lacklustre. The company has denied the rumour that it had signed Rs 5 bn deal with P&G.

In another pharma news, Dr. Reddy's (up marginally), is looking to at further ways to finance its R&D and litigation related expenses. One must remember that the company has recently successfully entered into a US$ 56 m agreement with ICICI (ICIC.BO, news) Venture Funds Management Company for the development and commercialization of ANDAs to be filed in 2004-05 and 2005-06. Under the terms of the agreement, ICICI Venture will fund the development, registration and legal costs related to the commercialization of ANDAs on a pre-determined basis. This agreement covers most of the ANDAs to be filed by Dr. Reddy's during the years 2004-05 and 2005-06. On commercialization of these products, Dr. Reddy's will pay ICICI Venture royalty on net sales for a period of 5 years. The specific financial terms of the agreement have not been disclosed. Under the terms of the agreement, ICICI Venture will fund US$ 22.5 m in the first phase with an option to invest an additional US$ 33.5 m in the second phase. The move is a positive for the company in the long run.

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