Asian stock markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 1.3% while the Hang Seng is down 0.1%. The Shanghai Composite is trading up by 0.3%. Stock markets in US closed somewhat flat on Friday even as threats by US President Donald Trump to increase threats was outweighed by strong earnings.
Back home, India share markets opened the day marginally higher. The BSE Sensex is trading up by 74 points while the NSE Nifty is trading up by 28 points. The BSE Mid Cap index opened up by 0.7% while BSE Small Cap index opened the day up by 0.4%.
The rupee is currently trading at 68.85 to the US$.
Meanwhile, India has outperformed its emerging market peers yet again for the year till date. While the Indian stock market index has returned 7.2%, the Chinese index has declined by 15.6%.
But, is this a false dawn?
Indian mid and small caps have fallen by 12.8% and 14.8% this year.
Even in the Sensex, majority of the gains are due to only eight out of the thirty stocks. Tanushree Banerjee, Co-head of Research calls them Sensex Dominoes.
India Outperforms Other Emerging Markets in 2018
Rising crude oil prices, rising interest rates, Donald Trump's trade war, and the strengthening of the US dollar are the main reasons for the fall in emerging markets. Foreign investors feel much more comfortable moving their funds to developed markets in the current scenario.
As per her, these factors are unlikely to improve any time soon.
Also, the Indian general elections coming up next year. It's time to brace yourselves for a lot of volatility and uncertainty in the near term.
But that doesn't mean you can't find safe stocks in this market. Tanushree certainly can. She believes, during times like these, the best thing you can do is to identify stocks that can ride out the storm.
In fact, just few days back, Tanushree identified two such stocks for her premium StockSelect subscribers.
If you haven't signed up to receive such excellent safe stock recommendations, you can do so here.
Sectoral indices have opened the day on a mixed note with information technology stocks and capital goods stocks witnessing maximum buying interest. While, PSU stocks & energy stocks have opened the day in red.
In the news from the IT sector. Beating Street expectations, the country's third largest software company Wipro on Friday posted a 16.2% increase in its net profits (quarter-on-quarter) for the April-June period, fuelled by the strong performance of the BFSI business.
The sale of the company's hosted data centre services business to Ensono was also reflected in the results.
The company reported a net profit of Rs 20.9 billion while consolidated revenues stood at Rs 148.3 billion, registering a sequential growth of 3.6%. The company's flagship IT services revenues stood at Rs 137 billion.
In US dollar terms, the IT services reported a revenue of US$2,026.5 million, which was at the higher end of the guidance on actual currency basis. The company has given a guidance for the second quarter of the year in the range US$2,009- US$2,049 million.
This translates to a sequential growth of 0.3% to 2.3%, excluding the impact of the divestment of the hosted data centre service business, which concluded in the quarter ended 30 June 2018.
Further, Wipro also announced a takeover of US-based Alight Solutions' India operations for a consideration of US$117 million.
The company's digital revenue increased 6.2% sequentially in constant currency terms and contributes 28.1% of the overall revenues.
Wipro share price opened the day down by 5.3%.
Moving on to the news from pharma sector. As per an article in a leading financial daily, Zydus Cadila announced that it has received the final approval from the USFDA to market its Acetylcysteine Injection (US RLD - Acetadote Injection), 6 g/30 mL (200 mg/mL).
According to the company, the product is an antidote for acetaminophen overdose indicated to prevent or lessen hepatic injury after ingestion of a potentially hepatotoxic quantity of acetaminophen.
Further, it will be manufactured at the group's formulations manufacturing facility at Moraiya, Ahmedabad.
The group now has more than 211 approvals and has so far filed over 330 ANDAs since the commencement of the filing process in FY 2003-04.
Speaking of pharma sector, did you know the BSE Healthcare Index is down 20% over the past three years? During the same period, the BSE Sensex is up 21%.
And this was a sector they called 'evergreen'.
Have Investors boarded a plane that's about to crash? Or is it just turbulence on the way to a smooth and safe landing?
It's important to understand the core issues. Regulatory problems for pharma companies have increased over the past few years. The frequency of visits as well as quality expectations have increased a lot.
While we expect the pain to continue in the short-term, the long-term picture still looks bright.
Stricter norms and pricing pressure will ensure only quality players remain. Companies with strong R&D facilities and quality compliant plants will have an edge over the others.
Cadila Healthcare share price opened the day up by 2.2%.
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This article was originally published in English at www.equitymaster.com
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