Indian Share Markets Open Flat; Healthcare & Realty Stocks Gain

Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.05% while the Hang Seng is up 0.14%. The Nikkei 225 is trading up by 0.07%. US stocks closed lower in light volume trade on Tuesday as shares of Apple tumbled, offsetting gains in energy stocks as oil prices hit their highest in more than two years.

Back home, India share markets have opened the day on a flat note. The BSE Sensex is trading higher by 37 points while the NSE Nifty is trading lower by 9 points. The BSE Mid Cap index and BSE Small Cap index both opened the day up by 0.2%.

Sectoral indices have opened the day on a mixed note with realty stocks and healthcare stocks witnessing maximum buying interest. While, stocks from banking sector and capital goods sector have opened the day in red. The rupee is trading at 64.05 to the US$.

Pharma stocks opened the day on a mixed note with Indoco Remedies and Aarti Drugs being the most active stocksin this space. As per an article in a leading financial daily, Dr. Reddy's Laboratories Ltd has launched Melphalan Hydrochloride for Injection with the approval of US Food and Drug Administration (USFDA).

The injection is a therapeutic equivalent generic version of Alkeran (melphalan hydrochloride) used in the treatment of certain types of cancer. Alkeran is a registered trademark of Apotex Inc.

According to IMS Health sales data, the Alkeran brand and generic drug had US sales of approximately US$107 million for the most recent twelve months ending in October 2017.

Dr. Reddy's Melphalan Hydrochloride for Injection is available in a carton containing one single-dose clear glass vial of freeze-dried melphalan hydrochloride equivalent to 50 mg melphalan and one 10 mL clear glass vial of sterile diluent.

In another development, Sun Pharmaceutical Industries said the USFDA has accepted a new drug application (NDA), filed by its wholly owned subsidiary, for OTX-101 (cyclosporine A, ophthalmic solution) 0.09%. It is a novel nanomicellar formulation of cyclosporine A 0.09% in a clear, preservative-free aqueous solution.

OTX-101 is now under review for approval by the USFDA, marking an important developmental milestone for Sun Pharma's dry eye candidate.

One shall note that, as per the Indian Pharmaceutical Alliance, the pace of drug approvals has gained momentum after they complained to FDA about delays last year.

Approvals for drugs have also picked up after USFDA concerns at some of the manufacturing units were addressed. Companies such as Divi's Laboratories, Cadila Healthcare, Sun Pharmaceuticals and Dr Reddy's Laboratories got regulatory clearances for some of their plants during the year. But several companies are still grappling to resolve FDA concerns.

However, FDA's move to speed up generic drug approvals in a bid to reduce healthcare costs is likely to provide some earnings relief to domestic pharma companies.

After being adversely affected by import bans and the suspension of new drug approvals from manufacturing facilities in the past three years, there has been a sharp pick-up in new drug approvals in FY17.

Generic Drug Approvals Hit The Roof

With an aim to lower the overall healthcare costs in the country, USFDA approved a record 763 generic drugs for the financial year ending 30th September. As per Mint Analysis, Indian pharma companies received 295 approvals accounting for 40% of the overall approvals during the year.

Even the total filings of abbreviated new drug applications (ANDAs) for generic drugs rose to 1,292 in FY17 from 852 in the previous year.

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Dr. Reddy's share price opened the day up by 0.7% while, Sun Pharma share price opened up by 1.8%.

Moving on to the news from the bank stocks. As per an article in a leading financial daily, Canara Bank will raise up to Rs 35 billion capital through a qualified institutional placement (QIP) route.

The decision in this respect was taken at the bank's board meeting held on Tuesday.

The board of bank decided to raise additional equity share capital amounting up to Rs 900 million through QIP route, by issuing up to 90 million equity shares of a face value of Rs 10 each with a premium to be decided as per the applicable guidelines/regulations for an aggregate amount not exceeding Rs 35 billion inclusive of such premium.

A buoyant secondary market, flush with domestic liquidity and the recently announced bank recapitalization plan announced by the central government have resulted in a rush of PSU bank QIPs. Already this month, Bank of Maharashtra and Union Bank of India have launched their QIPs.

This year, QIP fund-raising activity has been dominated by large issuances in the banking and financial services sector. Till November, 33 companies have raised Rs 457.6 billion.

Speaking of QIP route of equity raising, QIPs tend to be a faster way to raise capital as the dealing happens with a few investors - only institutions in this case. And this is why companies prefer this route - because of its convenience and fewer resource requirements compared to other methods of raising equity.

Canara bank share price opened down by 0.4%.

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

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