Heard on the Street

Patent buzz gives Panacea a boost

In the backdrop of a slowdown in the economy, the pharma sector is gaining favour as a defensive sector to invest in. While the large-caps have traditionally been on the top of the list of most investors, a mid-cap entity seems to be the latest hit. On Monday, dealers were heard pitching for Panacea Biotech to investors ready to put their money in pharma counters.

According to market buzz, the Punjab-based company has been granted a patent for a haemorrhoids drug by the US Patent & Trademark Office. The company would soon be launching the drug in the US and EU markets, dealers claimed. Analysts said the size of anti-haemorrhoids drug market in the US and the EU was in the range of $400-500 million.

While company officials could not be reached for comments, those in the know said the pharma entity has filed nearly 150 patent applications in the financial year 2007-08.

The company has also fulfiled WHO pre-qualification for its two combination vaccines for paediatric immunisation, Easyfour and Ecovac-4.

On Monday, the stock was briefly locked at its upper circuit of 20% at Rs 363.40. As the trading session came to an end, it closed at Rs 320, up 5.66%. On July 3, the B-group stock had touched a new 52-week low of Rs 273.05.

Foreign broking firms ‘learn’ about coalition politics

Foreign brokerages, of late, have been have been roping in analysts and experts to explain the nuances of coalition politics in India to their clients. They have been holding conference calls with clients and investors, trying to convince them that the government’s fall before the scheduled elections in 2009 “may not be negative for Indian equities.”

The rationale is that if a BJP-led government comes back to power, stalled economic reforms may be kick-started at a much faster pace compared to the Congress-led UPA government. These analysts and experts have said a Congress-led government, without support from the Left, would be good enough to push ahead reforms.

But, it remains to be seen, if their clients are fully taken in by such arguments in favour of Indian equities, as investors are historically known to be wary of political instability.

Discounted closing of Indian GDRs worries brokers

THOUGH the market managed to close 72 points higher on Monday, brokers are a bit apprehensive over the discounted closing of Indian GDRs on the International Order Book (depository receipts trading platform) of the London Stock Exchange.

As per Skindia GDR Index data, six GDRs of Indian blue chips ended their day at a discount to the local market. GAIL, Grasim Industries, ITC, Mahindra & Mahindra, Ranbaxy and SBI closed lower (to local market stock price) in the range of 2-6%.

The fall of SBI was more shocking for equity analysts as the GDR closed below local market price after a premium closing for 35 trading sessions on the International Order Book.

“Institutional investors take cues from DRs to decide on the next day’s strategy. From what we see, there could some selling pressure when the market opens on Tuesday,” said a Mumbai-based equity analyst.

Contributed by Ashish Rukhaiyar, Nishanth Vasudevan & Shailesh Menon in Economic Times dt. 8.7.08