Asian share markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.1%, while the Shanghai Composite led the Nikkei 225 lower. They fell 0.7% and 0.1% respectively. Wall Street stocks rose on Friday after the latest monthly jobs report pointed to strength in the US economy and geopolitical tensions eased.
Back home, India share markets opened the day on a strong note. The BSE Sensex is trading up by 165 points while the NSE Nifty is trading up by 61 points. The BSE Mid Cap index opened up by 0.3% while BSE Small Cap index opened up by 0.2%.
Barring IT stocks and FMCG stocks, all sectoral indices have opened the day in green with energy stocks and consumer durables stocks witnessing maximum buying interest. The rupee is trading at 67.18 to the US$.
Bank stocks opened the day on a mixed note with Allahabad Bank & Central Bank leading the gainers. Days ahead of RBI's monetary policy review, India's three major banks SBI, PNB and ICICI Bank on Friday increased their benchmark lending rates or MCLR by up to 0.1%, making loans costlier for consumers.
The new rates are effective from 1 June 2018. Most of home and auto loans are linked to MCLR (marginal cost of funds based lending rate). Higher lending rates indicates that the equated monthly instalments (EMIs) on loans will go up.
India's largest lender SBI has increased the lending rate by 10 basis points across all tenors up to three years.
Now SBI's overnight and one-month tenors' Marginal Cost of Funds Based Lending Rate (MCLR) stands at 7.9% as against 7.8%.
The state-owned Punjab National (PNB), the country's second largest lender, raised the MCLR for three-year and five-year tenors to 8.55% and 8.7%, respectively. PNB has also increased the base rate to 9.25% from the earlier 9.15%.
Further, ICICI Bank too said it has raised five-year tenor MCLR by 10 bps to 8.7%. It has also raised the MCLR by 10 bps in loans with tenor of one year and three years. However, lending rate remains unchanged in case of loans up to three months.
Private sector bank ICICI Bank too has raised one-year MCLR by 10 bps to 8.4% from today.
Meanwhile, mortage lender HDFC said that it has increased its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) are benchmarked, by 10 basis points, effective 2 June 2018.
And, Karnataka Bank has raised its interest rates on deposits.
Moving on to the news from the pharma sector. As per an article in a leading financial daily, Zydus Cadila has received the final approval from the US drug regulator to market an antibiotic used for treating bacterial infections.
The company's Doxycycline Hyclate capsules USP got the approval from the US Food and Drug Administration.
It is a tetracycline antibiotic which is used for the treatment of a wide variety of bacterial infections, including those that cause acne.
Reportedly, the capsules will be manufactured at the group's manufacturing facility at the special economic zone in Ahmedabad, Gujarat.
The group has now more than 195 approvals so far.
Cadila Healthcare share price opened the day up by 0.8%.
To know more about the company, you can access to Cadila Healthcare's latest result analysis and Cadila Healthcare analysis on our website.
Meanwhile, Dr. Reddy's share price surged 3.5% in the opening trade on the reports that the company expects to launch over 15 products in the US market in the current financial year.
The Hyderabad-based drug major also remains optimistic for double-digit growth in the domestic market in the ongoing financial year.
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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%.
The BSE Healthcare Index has underperformed the Sensex
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.
This article was originally published in English at www.equitymaster.com
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