Sensex slumps over 300 pts, Nifty below 8450; Sun Pharma up 2%

Dalal Street CapitalHeightThe market has opened at lower levels. The Sensex is down 318.07 points or 1.2 percent at 27199.61 and the Nifty is down 95.55 points or 1.1 percent at 8430.20. About 206 shares have advanced, 706 shares declined, and 38 shares are unchanged.

Sun Pharma and Infosys are gainers. HDFC, Bajaj Auto, Coal India, GAIL and M&M are major losers in the Sensex.

The Indian rupee slipped in the early trade. It has opened lower by 52 paise at 67.15 per dollar versus 66.63 Thursday. NS Venkatesh of Lakshmi Vilas Bank said, “The rupee today is expected to further signs of strengthening against basket of currencies as the RBI circular on S4A will be credit positive for banking.”

The dollar climbed to over 3 month high against the yen as investors adjusted to the reality of a Donald Trump administration and increased inflation expectations.

Asian shares dipped while the dollar strengthened broadly. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, with Korean shares off 0.5 percent. Australian shares eked out small gains of 0.1 percent.

Japan’s Nikkei also rose more than 1 percent to 6-1/2-month highs thanks to a weaker yen.

On Wall Street, US S&P 500 Index rose 0.2 percent while the Dow Jones industrial average jumped 1.2 percent, smashing through its previous record high set in August by almost 1 percent. In contrast, the technology-heavy Nasdaq fell 0.8 percent , with Apple dropping 2.8 percent.

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Live Stock Market Updates – Sensex, Nifty flat; Pharma, IT stocks drag

Dalal Street CapitalHeightThe Indian stock market fluctuated between gains and losses as a selloff in drug makers was countered by rally in FMCG companies.  The domestic market has opened in green.

At 9:40 AM, the S&P BSE Sensex is trading at 27,439 up mere nine points, while NSE Nifty is trading at 8,486 up mere two points.

The BSE Mid-cap Index is trading up 0.05% at 13,021 whereas BSE Small-cap Index is trading down 0.14% at 13,148.

ITC, HUL, Adani Ports, Cipla, GAIL and ICICI Bank are among the gainers, whereas Sun Pharmaceuticals, Dr Reddy’s, Lupin, L&T and Maruti Suzuki are losing sheen on NSE.

Some buying activity is seen in FMCG, private banking, media and metal sectors, while pharma, auto, banking, IT and realty sectors are showing weakness on NSE.

The INDIA VIX is 0.71% at 16.5825. Out of 1,867 stocks traded on the NSE, 807 declined, 663 advanced and 397 remained unchanged today.

A total of 20 stocks registered a fresh 52-week high in trade today, while 13 stocks touched a new 52-week low on the NSE.

The rupee opened marginally higher by one paise at 66.73/$ as against the previous close of 66.74/$.

Asian markets would see further weakness creep in as the losing streak in equities continues. Historically most US elections have seen a pre-election rally which may not be in the offing this time as uncertainty has been prevalent right till the end of the campaigns, with both participants equally poised near the finish line. However market underperformance before the event could see a smart year end rally as most negatives would be priced in & event uncertainty over equities could bounce sharply from oversold levels.

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Dr Reddy’s Labs Q2 net sinks 60% at Rs 309 cr, revenue falls 10%

dr-reddy-q2Dr Reddy’s Labs has posted net profit of Rs 309 crore in July-September quarter down 60.1 percent from Rs 774.7 crore in corresponding quarter last fiscal. Its consolidated revenue also slipped 10.1 percent at Rs 3616.3 crore compared to Rs 4020.7 crore on annual basis.

During the period, its EBITDA fell 43.9 percent at Rs 640 crore against Rs 1140.4 crore while margin was at 17.9 percent versus 28.4 percent year-on-year (YoY).

Performance of Dr Reddy’s Laboratories in July-September quarter was expected to be weak with profit falling 59 percent year-on-year to Rs 298 crore on poor operational performance.

According to analysts polled by CNBC-TV18, revenue during the quarter was seen falling 14 percent to Rs 3,426 crore on yearly basis.

“All our major businesses have shown sequential improvement over the previous quarter with revenues growing 11 percent and EBITDA by 61 percent. We have made considerable progress in our remediation efforts and continue to work on addressing concerns of the regulators,” GV Prasad , Co-chairman and CEO of the company said.

More to come…

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Dr Reddy’s Labs Q2 profit may sink 59%, US sales seen down 20%

 Dr Reddy's Laboratories Performance of Dr Reddy’s Laboratories in July-September quarter is expected to be weak as profit is likely to plunge 59 percent year-on-year to Rs 298 crore on poor operational performance.

According to analysts polled by CNBC-TV18, revenue during the quarter is seen falling 14 percent to Rs 3,426 crore on yearly basis. US business may decline by around 20 percent YoY.

Higher competition in base business in US for drugs such as Valcyte, Vidaza generic etc, lack of new launches in US market, warning Letter by USFDA on 3 plants and cancellation of McNeil contract (US-based consumer healthcare company) may impact revenue growth in Q2.

Dr Reddy’s Labs had mentioned in Q1FY17 that contract with McNeil would begin tapering off over next two quarters and impact would be USD 25 million.

Analysts say Rest of the World Markets is likely to show steep YoY decline led by low sales in Venezuela.

In fact, in Rest of the World Markets, Venezuela revenue was down 53 percent YoY in Q1 as there were no sales and Rest of the World contribution reduced to 4 percent from 11 percent earlier.

Russia and CIS may decline during the quarter but Russia can grow in constant currency. Pharma services & active ingredients may remain muted due to warning letter on 3 plants.

However, domestic business in Q2 is likely to grow at around 12-14 percent YoY, better than 10 percent in Q1.

EBITDA (earnings before interest, tax, depreciation and amortisation) may fall 45.7 percent to Rs 619.8 crore and margin may shrink 1050 basis points to 18.1 percent on yearly basis due to slowdown in US sales and higher remediation costs.

Commentary on USFDA warning letter on 3 plants will be closely watched.

Overall analysts are not expecting growth in FY17 as it is expected to be a ‘wash-out’ year due to issues such as US pricing pressure, lack of approvals and overhang of USFDA warning letter on 3 plants.

After Q1FY17 earnings, Credit Suisse had downgraded to underperform from neutral; Jefferies – underperform from hold; Macquarie – downgraded to neutral; CLSA – to outperform from buy; and Religare – to sell from hold.

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