Telecom stocks edge higher

Key benchmark indices edged higher in morning trade amid high intraday volatility. At 10:25 IST, the barometer index, the S&P BSE Sensex was up 93.65 points or 0.37% at 25,703.86. The 50-unit CNX Nifty was up 26.45 points or 0.34% at 7,815.75. Broad market depicted strength. There were two gainers against every loser on BSE. 1,231 shares rose and 613 shares declined. A total of 52 shares were unchanged. The BSE Mid-Cap index was up 1.03%. The BSE Small-Cap index was up 0.77%. Both these indices outperformed the Sensex.

In overseas markets, Chinese stocks led losses for Asian markets as data over the weekend showed growth in China's investment and factory output missed forecasts in August, pointing to a further cooling in the world's second-largest economy. China's Shanghai Composite index was off 3.2%. US stocks ended modestly higher on Friday, 11 September 2015, ahead of the key Federal Reserve meeting. The Fed's policy-making committee holds a two-day meeting on 16 and 17 September 2015.

Back home, in sector trends, capital goods stocks were mixed. Siemens (up 0.62%), Havells India (up 0.62%), Crompton Greaves (up 1.89%), Alstom T&D India (up 0.52%), ABB India (up 0.23%), Suzlon Energy (up 0.91%) and Bharat Heavy Electricals (up 0.14%) edged higher. Thermax (down 0.38%), L&T (down 0.07%), Beml (down 0.34%) and Bharat Electronics (down 3.15%) edged lower.

Telecom stocks gained. Tata Teleservices (Maharashtra) (up 1.57%), Mahanagar Telephone Nigam (up 0.97%), Reliance Communications (up 0.77%) and Idea Cellular (up 0.27%) edged higher. Bharti Airtel (down 0.3%) edged lower.

Among individual stocks, Maruti Suzuki India (MSIL) was up 0.03% at Rs 4,318.70. The stock hit a high of Rs 4,333.70 and a low of Rs 4,287.35 so far during the day. MSIL on Saturday, 12 September 2015, announced the introduction of two new variants: Vxi (O) and Vdi (O), of its popular premium sedan, Ciaz. The new variants, while offering all the features and attributes of the base variants Ciaz Vxi and Vdi, come with additional safety features including dual airbags, ABS, seat belt pre-tensioner & force limiters and seat belt reminder with buzzer (driver side).

Dr Reddy's Laboratories (DRL) was up 0.12% at Rs 4,010. DRL during market hours today, 14 September 2015, announced the signing of a commercialization deal with Hatchtech, an Australian pharmaceutical company developing an innovative prescription head lice product, Xeglyze Lotion. The exclusive rights for this product are applicable for the territories of the United States, Canada, India, Russia and the CIS, Australia, New Zealand and Venezuela, DRL said in a statement.

Additionally, Hatchtech announced it will be filing its new drug application (ANDA) for Xeglyze with the US Food and Drug Administration (FDA). If approved, the product will be marketed in the United States by Promius Pharma, a wholly-owned specialty company of DRL.

As part of the agreement, DRL will pay Hatchtech an upfront amount of $10 million, up to $50 million based on pre commercialization milestones and an undisclosed amount based on post commercialization milestones, linked to achievement of annual net sales targets.

Hatchtech Pty is an Australian specialty pharmaceutical product company developing technology for the control of invertebrate pests.

Jubilant Life Sciences rose 3.08% to Rs 322.65 after the company signed term sheet with Cyclopharm for exclusive license to market Technegas in the United States. Jubilant Life Sciences announced today, 14 September 2015 that one of its wholly-owned subsidiaries, Jubilant DraxImage Inc. (DraxImage) has signed a term sheet, subject to satisfactory due diligence and execution of the Definitive Agreement and other necessary approvals, with Cyclopharm (CYC), providing DraxImage an exclusive license to market and distribute Technegas in the United States. Technegas is an imaging agent primarily used in Pulmonary Embolism (blockage of lung arteries) and is currently being sold in 55 countries including EU, Japan and Canada by CYC.

DraxImage will assist CYC with the development and financing of the phase III clinical trials for Technegas, and any other steps required to file for and obtain USFDA approval, Jubilant Life Sciences said.

As per the primary commercial terms of the term sheet, DraxImage will provide at risk up to $4.5 million to fund the USFDA clinical trial currently under development with any additional costs to be funded by both parties equally. Upon successful completion of the USFDA trial, DraxImage will be able to convert USFDA trial costs into CYC common stock up to a maximum of 15% of the total CYC shareholding. DraxImage will pay CYC a 17.5% royalty on sale in addition to an agreed margin above the cost of goods sold, Jubilant Life Sciences said.

JK Tyre & Industries rose 0.28% at Rs 108.75 after the company said its board approved acquisition of Cavendish Industries from Kesoram Industries. JK Tyre & Industries and JK Asia Pacific Singapore, a wholly-owned subsidiary of JK Tyre have signed a binding term sheet with Kesoram Industries to acquire 100% equity in Cavendish Industries (CIL). CIL houses a tyre business undertaking at Haridwar (Laksar), which manufactures a range of tyres, tubes and flaps. JK Group has agreed for this acquisition at an enterprise value not exceeding Rs 2200 crore, subject to conditions, wherein JK Tyre will hold the largest shareholding block and shall have substantial management control of CIL with an option to place upto 55% with its associates/group companies, JK Tyre & Industries said in a statement.

The acquisition is proposed to be funded, by combination of debt and internal accruals raised by JK Tyre and other JK Group entities. The financial exposure of JK Tyre in the acquisition is expected to be of the order of Rs 450 crore. The final transaction is expected to consummate over next few months (subject to various approvals) with definitive documentation expected to be executed between the Parties in due course of time, the company said.

The acquisition will provide JK Tyre with further impetus towards ready expansion in the truck and bus radials segment where it is a market leader as well as entry into the fast growing 2 / 3 wheeler tyre market. Accordingly, JK Tyre estimates the transaction to be strategic, revenue accretive and synergistic with its existing tyre business.

Among macro data, data released after market hours on Friday, 11 September 2015 showed that India's index of industrial production (IIP) increased 4.2% in July 2015 over a year ago compared with the revised growth of 4.4% in June 2015. The IIP growth for June 2015 has been scaled up 4.4% in the first revision compared with 3.8% reported provisionally.

Another data showed that India's current account deficit (CAD) narrowed to $6.2 billion (1.2% of GDP) in Q1 June 2015 from $7.8 billion (1.6% of GDP) a year ago. This improvement was mainly on account of the merchandise trade deficit ($34.2 billion during Q1 June 2015) which contracted on a year-on-year (y-o-y) basis due to a larger absolute decline in merchandise imports relative to merchandise exports. The reduction in the CAD was also enabled by higher net earnings through services and lower outflow on account of primary income (profit, dividend and interest).

Meanwhile, the government is scheduled to unveil the consumer price index (CPI) data for the month of August 2015 after market hours today, 14 September 2015. The all-India general CPI inflation dipped to 3.78% in July 2015 from 5.4% in June 2015.

The government will release the data on inflation based on the wholesale price index (WPI) for August 2015 at 12:00 IST today, 14 September 2015. The WPI inflation continued to be in negative zone for the ninth straight month in July 2015. It stood at negative 4.05% in July 2015.

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