A bout of volatility was witnessed in afternoon trade as key benchmark indices trimmed intraday gains. At 13:15 IST, the barometer index, the S&P BSE Sensex was up 40.52 points or 0.14% at 28,043.64. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty was currently up 7.40 points or 0.09% at 8,643.95. Indian stocks rose today, 2 August 2016 as reports suggesting that the long-pending Goods and Services Tax (GST) bill is listed for consideration and passage in Rajya Sabha tomorrow, 3 August 2016 boosted sentiment. Data showing a good growth of eight core industries in June also supported gains on the domestic bourses.
The Sensex rose 172.10 points or 0.61% at the day's high of 28,175.22 in early trade. The barometer index fell 2.18 points or 0.01% at the day's low of 28,000.94 at the onset of trading session. The Nifty rose 50.65 points or 0.58% at the day's high of 8,687.20 in early trade. The index declined 4.80 points or 0.05% at the day's low of 8,631.75 in early afternoon trade.
In overseas stock markets, European and Asian stocks edged lower taking cues from a modestly lower day on Wall Street overnight as US crude oil prices slid. In Japan, the Nikkei 225 Average ended 1.47% lower. According to reports, Japanese Prime Minister Shinzo Abe's cabinet approved 13.5 trillion yen ($132.04 billion) in fiscal measures today, 2 August 2016 as part of efforts to revive the flagging economy, with cash payouts to low-income earners and infrastructure spending. The stimulus spending is part of a renewed government effort to coordinate its policy with the Bank of Japan.
US stocks lost momentum to finish mostly lower yesterday, 1 August 2016 as crude-oil futures returned to bear-market territory and weaker-than-expected manufacturing data raised doubts about the strength of the economy. The ISM manufacturing activity index fell to 52.6 in July, down from 53.2 the previous month.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,395 shares fell and 1,128 shares rose. A total of 132 shares were unchanged. The BSE Mid-Cap index was currently up 0.35%, outperforming the Sensex. The BSE Small-Cap index was currently up 0.02%, underperforming the Sensex.
Stocks of public sector banks were mixed. Indian Bank (up 6.96%), Bank of Baroda (up 0.88%), Union Bank of India (up 0.6%), IDBI Bank (up 0.51%) and State Bank of India (up 0.24%) rose. Punjab National Bank (down 0.41%), Bank of India (down 0.09%), Corporation Bank (down 1.7%) and United Bank of India (down 0.33%) edged lower.
Stocks of private sector banks edged higher. Yes Bank (up 1.42%), IndusInd Bank (up 0.38%), Kotak Mahindra Bank (up 0.14%) and Axis Bank (up 0.25%) rose. ICICI Bank (down 0.88%) declined.
Index heavyweight HDFC Bank was up 0.09%.
The Reserve Bank of India (RBI) yesterday, 1 August 2016 announced guidelines for 'on tap' licensing of universal banks in the private sector. Some of the key aspects of the guidelines include: (i) resident individuals and professionals having 10 years of experience in banking and finance at a senior level are also eligible to promote universal banks; (ii) large industrial houses are excluded as eligible entities but are permitted to invest in the banks up to 10%; (iii) Non-Operative Financial Holding Company (NOFHC) has been made non-mandatory in case of promoters being individuals or standalone promoting/converting entities who/which do not have other group entities; (iv) Not less than 51% of the total paid-up equity capital of the NOFHC shall be owned by the promoter/promoter group, instead being wholly owned by the promoter group; and (v) existing specialised activities have been permitted to be continued from a separate entity proposed to be held under the NOFHC subject to prior approval from the central bank and subject to it being ensured that similar activities are not conducted through the bank as well.
Pharma stocks witnessed a mixed trend. Ipca Laboratories (up 1.16%), Strides Shasun (up 0.63%), Dr Reddy's Laboratories (up 0.24%), Divi's Laboratories (up 0.22%) and Wockhardt (up 0.21%) rose. Glenmark Pharmaceuticals (down 0.23%), GlaxoSmithkline Pharmaceuticals (down 0.03%), Cipla (down 0.19%), Aurobindo Pharma (down 1.76%), Cadila Healthcare (down 1.63%) and Alkem Laboratories (down 0.95%) edged lower.
Lupin was down 0.89%. The company announced that its Japanese subsidiary Kyowa Pharmaceutical Industry Co., has entered into a strategic asset purchase agreement with Shionogi & Co., on 1 August 2016, to acquire 21 long-listed products from the Japanese pharma major, effective 1 December 2016, subject to certain closing conditions and regulatory approvals including the transfer of marketing authorization of the products to Kyowa. The announcement was made before trading hours today, 2 August 2016.
With the vision of growing globally as a drug discovery-based pharmaceutical company, Shionogi is focusing its resources on its core therapeutic and marketing areas, while continuing to create innovative medicines to support future growth and to strengthen its business operations. As a part of this growth strategy, Shionogi would transfer 21 long-listed products to Kyowa, the Japanese subsidiary of Lupin. Kyowa is amongst the top 10 Generic companies in Japan and a market leader in Central Nervous System (CNS) space well known for its "AMEL" brand, in addition to other generic pharmaceutical products in its portfolio. With this acquisition, Kyowa will rank 6th amongst generic companies in Japan. The 21 products cover therapy areas such as Central Nervous System (CNS), Oncology, Cardiovascular and Antiinfectives. These 21 products had sales of 9,400 million yen ($90 million) collectively on NHI price basis. Under the terms of this agreement, Kyowa will book the sales of the 21 products after 1 December 2016, and Shionogi will receive 15.4 billion yen from Kyowa.
Sun Pharmaceutical Industries (Sun Pharma) rose 0.5% after the company said that one of its subsidiaries received final approval from the United States Food and Drug Administration (USFDA) for its abbreviated new drug application for generic version of Glumetza tablets. Sun Pharma said that the drug is likely to be commercially launched in the US over the next few weeks. Glumetza tablets are indicated to improve glycemic control in adults with type 2 diabetes mellitus. As per IMS MAT June 2016 data, Glumetza tablets had annual sales of approximately $1.2 billion in the US. The announcement was made during market hours today, 2 August 2016.
Hero MotoCorp rose 1.27% after the company announced that its total sales rose 9.13% to 5.32 lakh units in July 2016 over July 2015. The company announced the monthly sales volume data after market hours yesterday, 1 August 2016.
Hero MotoCorp said that the company continues to dominate the 100 cc and 125 cc motorcycles segments. In the scooter segment, the Maestro Edge and Duet models maintained their growth trajectory in July 2016, Hero MotoCorp said.
In July 2016, Hero MotoCorp commenced retail sales of Splendor iSmart 110 - the first motorcycle to have been completely designed and developed by its in-house Research and development (R&D) at the state-of-the-art Hero Centre of Innovation and Technology in Jaipur. The company said that the initial customer response to the new bike has been positive.
With the above average monsoon and implementation of the seventh pay commission recommendations, the company remains cautiously optimistic about a positive turnaround in the two-wheeler industry in the second half of the year, Hero MotoCorp said in a statement.
On the macro front, eight core industries comprising nearly 38% of the weight of items included in the Index of Industrial Production (IIP) increased 5.2% in June 2016 over June 2015, compared to 2.8% growth in May 2016 and 3.1% growth in June 2015. Its cumulative growth during the three months period from April to June 2016 was 5.4%. The data was announced after market hours yesterday, 1 August 2016.
Meanwhile, investors are awaiting the progress on the Goods and Services Tax (GST) constitutional amendment bill in parliament. According to reports, the long-pending GST Bill is listed for consideration and passage in Rajya Sabha tomorrow, 3 August 2016 amidst strong indications that the most far-reaching taxation reform would be supported by Congress and all other major political parties. The government is keen to get the GST Bill approved during the Monsoon Session of Parliament ending on 12 August 2016.
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.
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