Key benchmark indices trimmed some losses in afternoon trade after European market opened higher. At 13:20 IST, the barometer index, the S&P BSE Sensex, was down 108.02 points or 0.38% at 27,968.98. The Nifty 50 index was currently down 39.90 points or 0.46% at 8,627.00. The Sensex was currently trading below the psychologically important 28,000 level. Weakness in Asian stocks weighed on sentiment on the domestic bourses.
The latest slide on the bourses materialized after the government on Saturday, 20 August 2016, named Reserve Bank of India (RBI) deputy governor Urjit Patel as new RBI governor. Patel is known for his hawkish view on inflation just like Raghuram Rajan whose term as the RBI governor ends on 4 September 2016. Patel will take charge as RBI governor for a 3 year term from 4 September 2016. Patel handles the monetary policy department as the RBI deputy governor. By naming Patel who is a deputy governor at the central bank as the new RBI governor, the government is sending signal to markets that there will be continuity of central bank's policies.
The government early this month notified consumer price inflation target of 4% with upper tolerance level of 6% and lower tolerance level of 2% to be achieved by RBI. This target is valid until 31 March 2021.
In overseas stock markets, European stocks opened higher today, 22 August 2016, but cautiousness prevailed on speculation over a possible US rate hike before the end of the year. Most Asian stocks edged lower amid uncertainty whether the US Federal Reserve is readying an interest rate hike next month. US stocks registered small losses on Friday, 19 August 2016, with traders holding their horses ahead of a speech from Federal Reserve chair Janet Yellen at Jackson Hole later this week. Yellen's speech at the Kansas City Fed's annual Monetary Policy Symposium in Jackson Hole, Wyoming is scheduled on Friday, 26 August 2016. Minutes from the Federal Open Market Committee's (FOMC) July meeting showed officials were split on whether an increase in interest rate was needed soon.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,326 shares declined and 1,194 shares rose. A total of 197 shares were unchanged. The BSE Mid-Cap index was currently down 0.26%. The BSE Small-Cap index was currently down 0.02%. The losses for both these indices were lower than the Sensex's decline in percentage terms.
Pharmaceutical stocks were mixed. Biocon (up 3.18%), Piramal Enterprises (up 1.75%), Cipla (up 0.41%), Divi's Laboratories (up 0.4%), IPCA Laboratories (up 0.13%), Alkem Laboratories (up 0.03%) and Dr Reddy's Laboratories (up 0.01%), edged higher. Wockhardt (down 0.21%), GlaxoSmithKline Pharmaceuticals (down 0.44%), Glenmark Pharmaceuticals (down 0.81%), Cadila Healthcare (down 1.29%), Aurobindo Pharma (down 1.53%), Sun Pharmaceutical Industries (down 1.53%) and Strides Shasun (down 1.89%), edged lower.
Pharma major Lupin was down 1.71% at Rs 1,550.35. The company during market hours today, 22 August 2016, announced that it has received approval for Acotiamide 100 mg Tablets from the Central Drugs Standard Control Organisation (CDSCO). Lupin said it shall commence promoting the product in India shortly. Acotiamide is a first-in-class novel drug to be introduced into the Indian Pharmaceutical Market (IPM) which could benefit millions of patients suffering from Dyspepsia or Indigestion, amongst the most common stomach complaints encountered in clinical practice. The current market for plain Gastrointestinal (GI) prokinetics and combinations is estimated to be around Rs 2640 crore, growing at 14%. The overall GI market is estimated at Rs 11438 crore which is growing at 13% as per IMS MAT June 2016 data.
Most capital goods shares edged lower. AIA Engineering (down 3.03%), ABB India (down 0.79%), Lakshmi Machine Works (down 0.78%), Siemens (down 0.75%), SKF India (down 0.69%), Thermax (down 0.64%), Crompton Greaves (down 0.4%), Bharat Electronics (down 0.38%), Suzlon Energy (down 0.3%), GE T&D India (down 0.28%), Larsen & Toubro (down 0.1%), Punj Lloyd (down 0.08%) and BEML (down 0.05%), edged lower. Havells India (up 0.05%), Jindal Saw (up 0.1%), Reliance Defence and Engineering (up 0.11%), Praj Industries (up 0.26%), ALSTOM India (up 0.67%) and Bharat Heavy Electricals (up 2.29%), edged higher.
Sun TV Network lost 4.85% to Rs 458.90 after the company's EBITDA margin declined 166 basis points in Q1 June 2016 over Q1 June 2015. Sun TV Network's net profit rose 19.02% to Rs 233.06 crore on 9.89% growth in total income to Rs 782.38 crore in Q1 June 2016 over Q1 June 2015. The company's earnings before interest, taxation, depreciation and amortization (EBITDA) rose 7.25% to Rs 436.43 crore in Q1 June 2016 over Q1 June 2015. EBITDA margin declined 166 basis points to 57.36% in Q1 June 2016 from 59.02% in Q1 June 2015.
Sun TV Network's subscription revenue grew about 22% to Rs 232.13 crore in Q1 June 2016 over Q1 June 2015. Cable TV Subscription revenue rose about 37% and DTH subscription revenue rose about 16% in Q1 June 2016 over Q1 June 2015, Sun TV Network said.
Meanwhile, global credit rating agency Moody's Investors Service said in a report that India's credit profile is supported by the strong growth potential of its large economy and the high private savings rate which underpins the government's access to domestic financing at relatively favorable terms. These credit strengths are balanced against a high government debt burden (67.4% of GDP in 2015), regulatory and infrastructure constraints on its competitiveness, slow pace of policy reform, and the contingent liability risk to the sovereign from public sector banks' high and rising non-performing loans, the rating agency said. Moody's expect Indian corporate sector's profitability to remain muted which will continue to dampen its ability and willingness to invest in the next few quarters. Moody's expects India's real GDP growth at around 7.5% in the next two years.
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