Key benchmark indices hovered in positive zone in early afternoon trade. At 12:15 IST, the barometer index, the S&P BSE Sensex was up 109.17 points or 0.39% at 28,133.50. The Nifty 50 index was currently up 32.20 points or 0.37% at 8,648. Market sentiment was positive after the US Federal Reserve has opted to keep interest rates at ultra-low level after the conclusion of a two-day monetary policy meeting. The ultra-loose monetary policy in the US has encouraged heavy investment in higher-yielding emerging markets.
The Sensex rose 119.99 points or 0.42% at the day's high of 28,144.32 in early trade. The barometer index rose 40.57 points or 0.14% at the day's low of 28,064.90 at the onset of trading session. The Nifty rose 35.20 points or 0.4% at the day's high of 8,651 in early afternoon trade. The index rose 10.55 points or 0.12% at the day's low of 8,626.35 at the onset of trading session.
In overseas stock markets, Asian stocks edged lower tracking lacklustre trading in US markets overnight. In Japan, the Nikkei 225 Average ended 1.13% lower. Investors are hoping for further easing of monetary policy from the Bank of Japan (BOJ) after the conclusion of a two-day monetary policy meeting on 28-29 July 2016. Strength in the yen against the dollar post last month's Brexit vote and data showing a slowdown in the Japanese economy have triggered expectations of further easing of monetary policy from the BOJ. A stronger yen hurts the competitiveness of Japanese exporters.
US stocks closed mixed yesterday, 27 July 2016, after the Federal Reserve statement and major earnings reports. The Federal Open Market Committee (FOMC) has decided not to raise interest rates, maintaining the ultra-low level they have been at since December 2015. The US central bank opted to keep rates between 0.25% and 0.5%. The Fed said near-term risks to the economic outlook have diminished but inflation remained below the bank's target.
Closer home, the market breadth indicating the overall health of the market was strong. 1,495 shares rose and 830 shares declined. A total of 174 shares were unchanged. The BSE Mid-Cap index was currently up 0.87%. The BSE Small-Cap index was currently up 0.91%. Both these indices outperformed the Sensex.
Pharma stocks edged higher. Wockhardt (up 1.7%), Ipca Laboratories (up 1.23%), Strides Shasun (up 0.86%), Cadila Healthcare (up 0.87%), Cipla (up 0.76%), Alkem Laboratories (up 0.84%), GlaxoSmithkline Pharmaceuticals (up 0.37%), Lupin (up 0.3%) and Dr Reddy's Laboratories (up 0.22%) rose. Divi's Laboratories (down 0.81%), Glenmark Pharmaceuticals (down 0.39%) and Aurobindo Pharma (down 0.11%) edged lower.
Sun Pharmaceutical Industries (Sun Pharma) was up 1.89% after the company said it signed an agreement with RPG Life Sciences on 27 July 2016 to divest seven prescription brands in India, owned by Sun Pharma and its subsidiary, for a consideration of Rs 41 crore. The seven divested brands include brands used for treatment of respiratory-track infections, urological disorders, cardiovascular diseases and brands in health supplements segment. This divestment is subject to receipt of Competition Commission of India's (CCI) approval. The announcement was made after market hours yesterday, 27 July 2016.
Separately, Sun Pharma before market hours today, 28 July 2016, announced a licencing agreement with Almirall on the development and commercialization of Tildrakizumab for psoriasis in Europe. Tildrakizumab is an investigational IL-23p19 inhibitor currently being evaluated in patients with moderate-to-severe plaque psoriasis. Under the terms of the licence agreement, Almirall will pay Sun Pharma an initial upfront payment of $50 million. Phase-3 studies of Tildrakizumab have recently been completed. Sun Pharma will be eligible to receive development and regulatory milestone payments and, additionally, sales milestone payments and royalties on net sales, the terms of which are confidential. Almirall will be able to lead European studies, and participate in larger global clinical studies for psoriasis indication subject to the terms of the Sun Pharma-Merck agreements, as well as certain cost sharing agreements. Sun Pharma will continue to lead development of Tildrakizumab for other indications, where Almirall will have right of first negotiation for certain indications in Europe. Additionally, the license agreement has a provision for possible co-promotion agreement at some point in the future, subject to certain conditions, Sun Pharma said in a statement.
Realty stocks edged higher. Indiabulls Real Estate (up 5.19%), Sobha (up 2.3%), Oberoi Realty (up 1.22%), DLF (up 1.15%), Housing Development & Infrastructure (up 0.98%) and Prestige Estates Projects (up 0.36%) rose. Unitech (down 1.38%), D B Realty (down 0.54%) and Godrej Properties (down 0.61%) edged lower.
Asian Paints jumped after the company reported strong Q1 results. The stock was up 6.36% at Rs 1,129.35. The stock hit a record high of Rs 1,152.65 in intraday trade. The stock hit a low of Rs 1,067.25 so far during the day. The company's consolidated net profit after minority interest rose 17.9% to Rs 535 crore on 10.2% increase interest from operations to Rs 4082.10 crore in Q1 June 2016 over Q1 June 2015. Profit before depreciation, interest, and taxes (PBDIT) rose 20.9% to Rs 820.30 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 27 July 2016.
K.B.S. Anand, Managing Director & CEO, Asian Paints said that the decorative business segment India registered double digit growth during the quarter. Lower raw material prices led to improved margins. Industrial business registered good growth in the industrial liquid paints category for the company's joint venture (JV) AP-PPG while the other JV PPG-AP saw good demand in the auto original equipment manufacturers (OEM) and general industrial segment. The company's international business performed well, aided by good growth in markets like Nepal, UAE and Fiji. Both the segments in the home improvement category -- the Kitchen (Sleek) and Bath (ESS ESS) businesses -- delivered good topline growth in the quarter as compared to the previous year.
Meanwhile, according to reports, the government yesterday, 27 July 2016, cleared changes in the constitutional amendment bill on Goods and Services Tax (GST) including doing away with the additional 1% tax by producing states and compensating all states for any revenue loss in the first five years post the GST rollout. The Cabinet, headed by Prime Minister Narendra Modi, decided not to accede to the Congress party's demand of specifying the GST rate in the Constitution itself, reports suggested. It is likely to be part of the GST bill that will be legislated separately by both the Centre and states, as per reports.
The GST bill, which has been approved by the Lok Sabha is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax. The month-long monsoon session of the parliament will conclude on 12 August 2016.
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