Pharma Stocks upbeat as Glaxo Pharma announces to up its stake in Indian Biz

Markets continue to struggle to remain in the green, with continued profit-booking appearing at the slightest of upmove in the heavy-weighted stocks. The news on GLAXO PHARMA’s decision to enhance its holding in the Indian business at a significant premium has resulted into some of the other PHARMA & FMCG stocks gain momentum. Additionally, there also seems to be a distinct vacillation towards the large cap IT scrips – INFY and TCS seem to be the current favourites in the market, given the strong possibility of a turnaround led upmove in operating revenue for the larger players in the US markets.

Banking stocks continue to confuse marketmen esp. with the RBI’s mid-quarter credit policy around the corner later this week though there seems to be a wide consensus on the possibility of a 25 bps repo rate hike. It would also be worth mentioning that the RBI governor in his recent public appearances has been talking about adding liquidity into the system which may seem contrarian to the very clear need to hike repo rates particularly to rein in inflation. So it remains to be seen how the RBI governor does this tightrope walk once again and markets could take further cues from there by Wednesday. Before the RBI policy announcement, we also face the trigger of the FOMC’s announcement on the taper and we expect market volumes during the day’s session to be on the lighter side in light of this event on Tuesday.

The new 10-yr benchmark continues to be edging stronger on yields, almost within kissing distance of the 9% mark – the 25 bps repo rate hike almost seems to have been factored in. Any deviation from the expected move by the RBI on Wednesday would only impact the yields going ahead.