February 9: mid-sessions' report

After opening in the negative zone key benchmark indices continued to trade on a weak note. Nifty VIX has seen 7.29% up jump on an intraday basis. All sectoral indices are trading in the red except oil & gas and pharma. The Nifty & Sensex (-1.11% & -0.99%) has been continuously falling from last one week and currently trading around 1 year low. The BSE Midcap and BSE small cap are down by 1.67% and 1.36% respectively. The rupee is trading at 68.06 to the US$. 

As per leading newspapers, the government is looking to allow infrastructure companies to file a consolidated group tax return which will allow them to pay taxes as a single entity. The idea behind it is to push much needed growth in the sector as main companies have been defaulting on the debt payment. This would help many companies to pass on the benefit of one project to another project if the tax reform is passed and serve their debt on timely manner.

Dr Reddy’s Laboratories is expected to announce Q3FY16 result after market hours. According to average estimates, profit is likely to be at Rs.646.35 crore, a growth 12.5% YoY basis and Revenue is to grow by 6.6% YoY to Rs.4096.74 crore. Analysts expect growth should be driven by the USA and domestic formulation market. On Operating front, it is expected to post 9.8% y-o-y to Rs 1,038.49 crore and margin is seen at 25.35% in Q3.  Key factor to watch would be management commentary on USFDA warning letter, which was issued in month of November 2015 on two API facilities in Andhra Pradesh and one oncology formulation facility in Visakhapatnam. This plant contributes 10%-12% to total sales; and the other factor to look out for would be devaluation effect on Russia & CIS business.