Stocks In Action For October 4, 2012

Cipla yesterday said that its Drug for Neglected Diseases initiative (DNDi) has received pre-qualification from the World Health Organisation (WHO) for an anti-malaria drug. Cipla is manufacturing a fixed dose combination drug under a technology transfer agreement with DNDi which is the first of its kind to be pre-qualified by the WHO. This drug is being developed at its Patalganga facility and a pre-qualified status would make it eligible to tenders that receive funding from agencies like UNICEF, among others. This would result in an upward move in Cipla’s stock price today.

Among other pharmaceutical companies, moving ahead on the approval ladder was Aurobindo Pharma which received the Abbreviated New Drug Application (ANDA) approval from the USFDA for a drug to treat acid reflux. This news came in yesterday, after the company just last week received a nod from the USFDA for a copy of a drug to treat sleeping disorders. This news is expected to push the stock price of Aurobindo Pharma higher today.

Kingfisher Airlines was trading almost 5 per cent lower yesterday due to a halt in operations with the DGCA asking the airline to come up with a credible salary plan for the body to consider resuming services. News for the company worsened later in the day after talks between the management and striking engineers and pilots took a hit when the striking staff rejected the management’s offer to part payment. Due to the lack of commitment the striking staff has announced that they would not recall the strike. This would further impact the stock’s performance and send it lower today as well.

Unsecured creditors of Maruti Suzuki India Limited (MSIL) approved a scheme to integrate the company with Suzuki Powertrain, the company that supplies approximately 3,00,000 diesel engines and transmissions to MSIL annually. This would help MSIL bring efficiency in operations and procurement and thus reduce transaction costs. It would also result in Suzuki Motor Corporation’s stake in MSIL rise from 54.2 per cent to 56.2 per cent. The share price of MSIL is likely to see volatility in today’s trading session.

Mahindra Satyam said it would raise the wages of its employees in the range of 7 per cent and 12 per cent to be effective from October 1, 2012. The raise would be applicable to roughly 33,000 employees of Mahindra Satyam. This is likely to push the stock price of Mahindra Satyam higher today.

The rupee hit a five-month high and has been appreciating since policy inaction got to an end with the government announcing a row of reforms to boost the economy. Due to this appreciation in exchange rates, the export-centric IT industry is likely to see lesser realisation on profits. This has been dragging IT stocks lower and the index has been the worst performer lately. A further strengthening in the rupee would further deteriorate IT stocks.

Gujarat State Petroleum Corporation Limited announced that it would acquire a majority stake of 65.12 per cent in Gujarat Gas Company Limited from the BG Group for Rs 295 a piece. This would be subject to approvals from the CCI and RBI. The share price of Gujarat Gas Company Limited is expected to see an upswing in today’s trading session.