Pharma shares drag Nifty below 7,500; US FOMC minutes eyed

Benchmark indices closed lower dragged by pharma shares after the government notified a ban on about 300 fixed dose combination (FDC) drugs.

Further, investors are keenly awaiting the outcome of the two-day US Federal Reserve policy meet which begins later today.

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The S&P BSE Sensex ended down 253 points at 24,551 and the Nifty50 closed 78 points lower at 7,461. In the broader markets, the BSE Midcap and Smallcap indices ended down 0.6%-0.8% each. Market breadth was negative with 1,630 losers and 1,011 gainers on the BSE.

"Recently Nifty rallied by more than 10% from its recent low of 6,825. There are chances that market can rally further to around 7,800 or 7,900 also, but any rally should be used as an exit opportunity, as we expect Nifty to target 6,600 to 6,300 in next 4-6 months," says AK Prabhakar, Head of Research, IDBI Capital.

On the currency front, the rupee trimmed its earlier gains, but was still quoting higher by 11 paise at 67.32 against the American currency on sustained bouts dollar selling from banks and exporters amid higher domestic equities.

Foreign institutional investors were net buyers in equities worth Rs 1,036 crore on Monday, as per provisional stock exchange data.

The Consumer Price Index (CPI)-based inflation eased to a four-month low of 5.18% in February from 5.69% in January, according to government release late Monday.

Among overseas markets, European shares fell on Tuesday, mirroring declines in Asia after the Bank of Japan painted a bleaker picture of the Japanese economy and helped push the yen higher, and as oil prices dropped again.

The BOJ left policy on hold, as expected. Investors' attention now turns to a two-day meeting of the US Federal Reserve's rate-setters, who are likely to signal a slower pace of interest rate hikes than forecast after they raised the cost of borrowing in December for the first time in nearly a decade. CAC, DAX and FTSE are down 0.2%-1%.

KEY STOCKS

Shares of pharmaceutical companies were under pressure, falling by up to 7% after the government notified a ban on about 300 fixed dose combination drugs.

Lupin, Divis Laboratories, Aurobindo Pharma, Anuh Pharma, Jubilant Life Sciences, Dishman Pharmaceuticals & Chemicals, Natco Pharma, Marksans Pharma, RPG Life Science and Pfizer were down 3%-8% on BSE.

Lupin dipped 7% to Rs 1,736 on the BSE in intra-day trade on media reports that the United States Food and Drug Administration (USFDA) cited nine observations in its inspection of the company's Goa facility last week.

Shares of Crompton Greaves tanked by over 70% as the company de-merged its consumer business from Tuesday. The prices reflect the market value for the firm's power business alone.

Sasken Communication Technologies ended higher by 11%, extending its previous day’s 20% surge on the BSE, on hopes of a special dividend.

Shares of sugar manufacturers ended higher on the bourses in otherwise weak market. Bannari Amman Sugars, Dalmia Bharat Sugar and Industries, Dwarikesh Sugar Industries, Oudh Sugar Mills and Riga Sugar Company touched their respective 52-week highs on the BSE in intra-day trade today.

SpiceJet gained 2% after the company announced that counsels of SpiceJet and KAL Airways have agreed before the Delhi High Court that they will jointly approach the regulators, seeking permission to issue warrants.

Persistent System rose 2% after it announced the acquisition of Australia's Salesforce partner and cloud application development firms, PRM Cloud Solutions.