Sensex, Nifty maintain uptrend; Cipla up 3%, Infosys weak

Moneycontrol Bureau

9:45 am Buzzing: Shares of Cipla touched record high at Rs 575.20 per share, up 8.5 percent intraday as it launched generic drug used for treatment of asthma and chronic obstructive pulmonary disease in Germany and Sweden. The drug major’s portfolio includes 2,000 products in 65 therapeutic categories.

Though analysts are impressed by its earlier- than-expected launch, most of them have not yet upgraded Cipla yet. Credit Suisse maintains a neutral rating on it stating base case is already priced in. According to the brokerage, Germany and Sweden are small markets but the launch signifies approval in the UK could be expected by FY15-end.

Credit Suisse estimates that the drug (Advair MDI generic) may generate USD 70 mn sales for Cipla (25 percent market share and 50 percent price erosion). "Competition in the MDI space includes Sandoz, Orion, Chiesi and Mylan. We expect GSK to retain 30 percent of the market share," it says in a report. The drug is a copy of generic version of GlaxoSmithKline's Advair in these countries.

Bank of America Merill Lynch also is expecting launches in more lucrative markets such as UK, France and Spain to follow over the next 12 months. "We believe Advair pMDI will remain a limited-competition opportunity for a prolonged period as Mylan is the only other generic company working on pMDI. Assuming 30 percent price erosion and 30 percent share for Cipla, we believe the firm will generate USD150mn sales at peak level (NPV of Rs 70/share)," it elaborates.

Morgan Stanley is hopeful that the UK would be key to the commercial upside and it being GSK's home market may invite aggressive response from it.

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After hitting record high, the market has once again opened on a strong note Tuesday. The Sensex is up 63.58 points at 26931.13 and the Nifty up 17.30 points at 8045. About 694 shares have advanced, 172 shares declined, and 21 shares are unchanged.

Cipla is up 3 percent followed by Hero, HDFC, Maruti and Tata Power. On the losing side are Dr Reddy's Labs, Infosys, Tata Motors, Wipro and HUL.

The Indian rupee opened marginally lower at 60.58 per dollar as against previous day's closing value of 60.52 a dollar.

Ashutosh Raina of HDFC Bank said, "The better than expected GDP number of 5.7 percent came as a pleasant surprise to the markets and was cheered across asset classes. This is coupled with good trade deficit numbers announced yesterday. The USD/INR pair continues to trade in 60-61/dollar range.  The appreciating bias should continue,” he said.

Meanwhile, the euro languishes at one-year lows, following an aimless session overnight with market activity severely hampered by a holiday in the US.

On the macro front, current account deficit for the first quarter came in at 1.7 percent of GDP versus 4.8 percent a year ago. The number is largely in line with expectations but core sector growth slowed down to just 2.7 percent in July.

In commodities, Brent crude prices slipped to 102 dollars a barrel as manufacturing growth faltered in Europe and China at a time of ample supply, although the risk of production setbacks remained high in Libya.

From precious metals space, gold was steady around 1,280 dollars an ounce, after posting a small gain last week. The dollar index was trading near a 13-month high, hurting the metal.