Sensex Opens Flat; FMCG & Bank Stocks Underperform

Asian stock markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.4% while the Hang Seng is down 0.7%. The Shanghai Composite is trading down by 0.3%. Meanwhile, Wall Street’s major indices fell on Thursday as trade-sensitive stocks were hit by a fresh round of tariffs in the trade dispute between the United States and China.

Back home, India share markets have opened the day on a flat note. The BSE Sensex is trading up by 30 points while the NSE Nifty is trading up by 6 points. The BSE Mid Cap index opened up by 0.2% and BSE Small Cap index opened the day down by 0.1%.

The rupee is currently trading at 70.07 to the US$.

Sectoral indices have opened the day on a mixed note with power stocks and capital goods stocks witnessing maximum buying interest. While, FMCG stocks and bank stocks have opened the day in red.

In the news from the pharma sector. As per an article in a leading financial daily, Lupin has entered the prescription dermatology segment in Brazil with the launch of two products Fillerina and Recrexina in the country.

Fillerina is a high-end anti-aging technology that incorporates a deep action innovative formulation to fill wrinkles and expression lines. Recrexina, on the other hand, is a hair-growth formulation which stimulates natural hair growth in active and partially inactive follicles.

The dermatology segment is a rapidly growing portion of the Brazilian pharmaceutical market.

Valued at US$ 28 billion, Brazil is the world’s sixth largest pharmaceutical market, driven by growing public health expenditure and increasing household income.

The dermatology segment in Brazil is worth US$ 1.5 billion and growing at 10% (CAGR) is one of the fastest growing segments in the country.

Lupin Brazil clocked sales of BRL 157 million during 2017–18 making it the largest Indian company in Brazil by volume and second largest by value.

The Mumbai-based company entered Brazil through the acquisition of Medquimica Industria Farmaceutica SA in 2015.

Speaking of Indian pharma sector, the leading therapy segments in terms of brand launches during FY13 to FY17 were dermatology, anti-infectives, cardiology, and gastroenterology. Anti-diabetics have also been growing in double-digits for the past five years.

However, with the government bringing a number of essential drugs under price control, prescription drugs are witnessing sluggish growth. Therefore, pharma companies are now focusing on the over-the-counter (OTC) medicines.

Domestic Pharma Market in a slow lane

Thus, while pricing controls keep the operating environment tough in the domestic market, pharma companies with strong brands in the OTC category are better placed to ride the slowdown.

To know more about the company, you can access to Lupin’s Q1FY19 result analysis and Lupin’s 2017–18 Annual Report Analysis on our website. Meanwhile, you can also check our recently released annual result analysis of BPCL, Ultratech Cement, Mindtree and Titan Co, among others.

In another development, Asia-focused private equity firm (PE) Baring Private Equity Asia is selling its stake worth almost Rs 11.2 billion in IT services company Hexaware Technologies Ltd.

Baring PE Asia currently holds a 71.3% stake in the IT company, through an entity called HT Global IT Solutions Holdings Ltd.

Reportedly, Baring is selling over 8% stake in Hexaware through a block deal. Investment bank Citi is running the transaction. The share sale is expected to fetch the PE firm a little over Rs 11 billion at a floor price of around Rs 447.5 per share. Shares will be sold to institutional investors.

The floor price of the stake sale is at an almost 10% discount to Thursday’s closing price of Rs 497.7 per share, on BSE.

Meanwhile, BG Asia Pacific Holdings Pte Limited offloaded 14% equity stake in Mumbai-based city gas distribution company Mahanagar Gas through open market transactions on Thursday.

The stock price closed at Rs 840.3 on the BSE, down 6.6% from previous close.

Speaking of bulk & block deals, our team of Equitymaster analysts have been working on a project to track the smartest minds in value investing. They have compiled a special report on them, called The Superinvestors of India.

Now, because of insights from these interactions, the team has glued their eyes on insider activity and bulk and block deals…

As per them…

  • “The three approaches — tracking superinvestor shareholdings, catching these moves early through bulk and block deal disclosures, and keeping tabs on changes in promoter holdings — have unveiled some critical smart money secrets…”

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This article was originally published in English at www.equitymaster.com

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