Monday November 12, 11:30 AM
Weakness persists... |
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By Equitymaster.com
The benchmark indices continued to reel under selling pressure during the previous hour of trade. While selling pressure is mounting across sectors, buying at lower levels is being witnessed in select stocks from the software, pharma, auto and FMCG sectors. The overall market breadth is negative with losers outnumbering gainers by a ratio of 7.4 to 1 on the NSE.
The BSE Sensex is trading at 18,452 (down 456 points) while the NSE Nifty is trading at 5,517 (down 146 points). The rupee is trading at 39.12 to the dollar.
As per a leading business daily, Wockhardt (WCKH.BO, news) is planning to spin off its innovative R&D business into a separate company. The move is being contemplated to seek funding support for innovative R&D and de-risk the generics and speciality pharma business from any kind of research downside. With this, Wockhardt will intensify its new drug research with plans to commercialise one of its lead molecules (WCK 771- which has proven effective in treating diverse staphylococcal infections) by 2011. The company, which has a focus to develop anti-infective new drugs, currently has a pipeline of two drugs in clinical trials. It expects to take two more drugs into human trials over the next 12 to 18 months. Wockhardt's move comes close on the heels of similar announcements by other Indian pharma majors to de-risk their core business and attract funding. The stock (down 1%), along with its peers Ranbaxy, Nicholas Piramal (each down 2%) and Glenmark Pharma (down 3%), is trading weak.
In line with the broader indices, banking stocks are trading lower with the major losers being SBI, HDFC Bank (HDBK.BO, news) (each down 3%) and ICICI Bank (ICBK.BO, news) (down 4%). The slowdown in credit offtake in the first six months of FY08 is showing no signs of reversing with the YoY credit growth for 1HFY08 slipping to 22.4% from 23.3% at the end of June 2007. With the government placing curbs on overseas borrowings by Indian companies in August, banks were expecting companies to turn to Indian banks to meet their domestic credit requirements. About 35% of overseas borrowings are estimated to have been for corporate rupee expenditure. Despite all this and festive offers the credit for retail purchases has not picked up in the last month. The subdued asset growth could be a result of high interest rates, corporations tying up alternative sources or the economic environment, which is causing delays in drawing funds from banks.
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