Weakness on Sensex, Nifty may continue : Monday closing report

As long as Nifty stays below 6,700, it may move further lower

We have been mentioning for the past few days that the market may give up some gains. On Monday, it looked like that this would happen. The indices today witnessed weakness throughout the session but the bulls put in an impressive recovery in the end.


The BSE 30-share Sensex opened at 22,356 while the NSE 50-share Nifty opened at 6,694. Sensex, after hitting a high of 22,482 went to hit a low of 22,198 and closed at 22,343 (down 16 points or 0.07%) while Nifty moved to the level of 6,650 after hitting a high of 6,725 and closed 6,695 (up 0.70 points or 0.01%). The NSE recorded a lower volume of 90.37 crore shares.


The top five gainers were Commodities (0.41%), Infra (0.30%), Metal (0.29%), PSU Bank (0.25%) and Auto (0.23%) while the top five losers were Realty (1.73%), Media (0.59%), Bank Nifty (0.36%), Midcap (0.28%) and PSE (0.27%).


Of the 50 stocks on the Nifty, 24 ended in the green. The top five gainers were UltraTech Cement (3.11%), Ambuja Cements (3.02%), Sun Pharma (2.65%), NMDC (2.35%) and Sesa Sterlite (2.05%). The top five losers were Jindal Steel (5.96%), Bhel (3.43%), DLF (3.15%), IDFC (2.32%) and Cipla (2.08%).


Of the 1,545 companies on the NSE, 771 companies closed in the green, 694 companies closed in the red while 80 closed flat.


Sun Pharma was at the top in the Sensex 30-stocks after it announced of signing a definitive agreement to buy Ranbaxy Lab for $4 billion in an all-stock transaction. Sun Pharma rose 2.68% to close at Rs587.25 on the BSE while Ranbaxy fell 3.12% to close at Rs445.20 on the BSE.


State-run BHEL was the top loser on the Sensex stocks, falling 3.32% to close at Rs177.85 on the BSE. BHEL’s net profit on provisional basis for year ended 31 March 2014 was Rs3,228 crore while the turnover was Rs40,366 crore for the year. The orders inflow was Rs28,007 crore in FY 2014.


GMR Infrastructure was among the top three gainers in the ‘A’ group of BSE. The company said that its consortium with Megawide has been formally awarded the Mactan-Cebu International Airport rehabilitation, expansion and operation project. GMR-Megawide Consortium had emerged as the highest bidder after offering a bid premium of 14.4 billion Philippine Pesos (approximately $320 million).


Those bidding to buy a 24% stake in Multi Commodity Exchange (MCX) from Financial Technologies have asked the company to divulge certain vital information before they make a non-binding offer such as details on the mix of trading volume on the commodity exchange; its related party transactions; and forensic tests conducted on the exchange after the government banned all trading activities on FT-founded National Spot Exchange Ltd. Financial Technologies fell 3.31% to close at Rs349.50 on the BSE.


US indices closed in the negative on Friday. Companies led the US job market past a milestone in March as private employment exceeded its pre-recession peak for the first time, progress that will allow the Federal Reserve to stick to its policy course. Payrolls excluding government agencies rose 192,000 after a 188,000 gain in February that was larger than first estimated, the Labor Department reported in Washington. That brought the job count to 116.1 million, beating the January 2008 high of 116 million. The jobless rate held at 6.7% even as half a million Americans entered the workforce.


The Asian indices which were trading today had a mixed performance. Nikkei 225 (1.69%) was the top loser while Jakarta Composite (1.30%) was the top gainer.


The World Bank trimmed its 2014 growth forecast for developing East Asia but said the region's economies were likely to see steady growth in the next couple of years, helped by a pick-up in global growth and trade. The Washington-based development bank expects the developing East Asia and Pacific (EAP) region to grow 7.1% in 2014 and 2015, down from the 7.2% rate it had previously forecast for both years. Growth in 2016 is also seen at 7.1%, staying slightly below the 2013 growth rate of 7.2%.


European indices were trading in the red. US Futures too were trading lower.


Insider trading in Ranbaxy?

Over six trading days, prior to the announcement of its acquisition by Sun Pharma on Monday, Ranbaxy shares rallied 34%. Could it be a case of insider trading?

On 7th April, Ranbaxy Laboratories Ltd (Ranbaxy) announced about its acquisition by Sun Pharmaceutical Industries Ltd (Sun Pharma) in $4 billion deal. Because of this announcement, Ranbaxy share price opened 10% up and made its 52-week high at Rs505 on BSE before it ended lower. But why was there a sudden rise in volumes and prices over six trading days, prior to this takeover?

The sudden unusual rise in Ranbaxy’s turnover and prices during last six trading days seems fishy. The stock rose by as much as Rs116 (34%) in days before its made public announcement, a huge rise of 8.18% happening on Friday, the trading day before the actual announcement! This was extremely unusual and points to a clear case of insider trading. Take a look at the following data:






No of Shares

27 Mar






28 Mar






31 Mar






01 Apr






02 Apr






03 Apr






04 Apr







On 28th March, Ranbaxy opened at Rs348 and closed 4.61% up at Rs364.05 with turnover of as high as 8.19 lakh shares. On 2nd April, Monday, it opened at Rs371 and closed 8.92% up at Rs400.39 with turnover of 23.13 lakh shares. On 3rd April it opened at Rs407 and closed 4.37% up to Rs424.8 and generated turnover of 15.84 lakh shares.

On 4th April, Ranbaxy opened at Rs428, made a day high at Rs462 and closed 7.37% up at Rs459.55 with as high as turnover of 22.80 lakh shares.


On 7th April, Ranbaxy opened 10% up and made 52-week high at Rs505 on announcement of its acquisition by Sun Pharma for $4 billion, after making its high it fell down to day low of Rs434.05 and closed 3.12% down at Rs445.20.

If someone knew about its acquisition plans and bought shares on 27th March at an average price of Rs350.8, he could have made 26.15% profit (Rs91.75 per share) on 7th April while selling at the average price of Rs442.55 today.

The dramatic nature of the rise and suspicions of insider trading comes through if you look at the following chart that plots Sensex and four other pharmaceutical stocks, Sun Pharma, Dr Reddy’s Laboratories, Ranbaxy and Cipla. It is not that the overall market was rallying. It was not that pharma companies were rallying. It was only Ranbaxy that was shooting up – based on no news that could be related to the company.

In fact, Ranbaxy has been struggling to find its feet ever since the Japan’s fourth largest pharma company, Daiichi Sankyo Co Ltd, took it over from streetsmart brothers Malvinder Singh and Shivinder Singh. It has lost billions trying to fix various problems that the earlier management seem to have left behind. During the December 2013 quarter itself, Ranbaxy lost Rs396 crore. The company is also facing legal issues from US FDA, which has banned its Toansa plant in Punjab. At one stage, the Daiichi management even thought of suing the Singh brothers for dumping a lemon on them.


In its regulatory filing Ranbaxy said, “Sun Pharma and Ranbaxy entered into definitive agreements pursuant to which Sun Pharma will acquire 100% of Ranbaxy in an all-stock transaction. Under these agreements, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. This exchange ratio represents an implied value of Rs457 for each Ranbaxy share, a premium of 18% to Ranbaxy’s 30-day volume-weighted average share price, as of the close of business on 4 April 2014.”

The suspicious spurt in volumes and price in Ranbaxy calls for an investigation by the market regulator. But then while insider trading is rife in India and SEBI rarely acts, despite having spent Rs40 odd crore in sophisticated inter-market surveillance system. Moneylife had written about suspicious trading activities in the AstraZeneca Pharma, LIC Housing Finance and Bajaj Corporation  to name a few. There have been no action by SEBI.

You may like to read more about Ranbaxy…


Ranbaxy plunges 20% as US FDA bans imports from its Toansa plant

Ranbaxy suspends production of all API’s from Toansa, Dewas plant

Ranbaxy Q4 loss narrows to Rs396 crore

Ranbaxy pleads guilty to felony charges; to pay $500 million in US lawsuit settlement


Ranbaxy to pay further $420,000 in US for selling sub-standard medicines


Making a smart choice: Thin line between compliance and collusion


EU regulator fines Ranbaxy, 8 others over Citalopram generic delay



Jose Koshy

3 years ago

Uff..Crazy n blatant Insider Trading. If this had happened in the US, we would have people in Jail. With just 2 % of savings getting to equity, the public voice is low to create an impact. Am sure Moneylife will file a complaint like always, now that there is an Ordinance passed 2 weeks back, guess they must use those provisions in the investigation.

Suiketu Shah

3 years ago

The knowledge most "wealth management companies" get is via insider trading and not "research department" etc and such nonsense.And on top it they deliberately give wrong tips so that they can earn illegal cash commission.(is they make more money than the victim investor who has trusted them in good faith)

sanjeev naik

3 years ago

It is a case of insider.. and half the profit is donated to election funds so no action will be taken against insiders....

Bosco Menezes

3 years ago

It certainly looks like there was insider trading on 2nd , 3rd & 4th

Policies in BJP manifesto bode well if implemented, says Nomura

According to Nomura, when compared to the Congress manifesto, which focusses on entitlements, the BJP is relying on effective delivery and implementation and better rural infrastructure to result in rural prosperity

The Bharatiya Janata Party (BJP) on Monday released its manifesto for the general election 2014. "While the vision of both BJP and Indian National Congress (Congress) parties remains on higher growth and lower inflation, their strategies differ and it will finally boil down to implementation. Opinion polls continue to point to rising momentum in favour of the BJP in the general elections. We believe the policies laid out in the BJP’s manifesto appear both sound and prudent, and, if implemented, bode well for the economy," says Nomura in a research note.


According to Nomura, when compared to the Congress manifesto, which focusses on entitlements, the BJP is relying on effective delivery and implementation and better rural infrastructure to result in rural prosperity. Similarly, rather than promoting higher support prices as promised by the Congress, the BJP plans to develop the agriculture sector by increasing public investment and boosting productivity. Overall, the BJP’s policies seem more centre-right, as expected, versus Congress’ more centre-left policies, it added.


Earlier, Nomura, while commenting on the manifesto released by Congress on 26th March, had said that the differentiating factor in the next elections will be the ability and the willingness of the new government to take up these reforms.


"The Congress’ manifesto suggests that the focus will be on getting the economy back on track. However, the entitlement-based policies will continue and will be widened to cover housing and health, which will entail a higher fiscal cost. Policies such as raising the minimum support price for farmers will also be inflationary. Other suggestions regarding economic reforms have been on the table for a long time now," Nomura added.


Here are the key highlights of manifestos released by BJP and Congress...



  • Check inflation by setting up a price stabilisation fund, unbundling the Food
  • Corporation of India, disseminate real-time data to farmers and evolve a single
  • 'National Agriculture Market'.
  • Promote job creation by developing labour-intensive manufacturing (textile, footwear, electronics assembly etc.), tourism, agriculture, retail, infrastructure, housing and by promoting self-employment among youth.
  • Centre-state relations: Evolve a model of national development driven by states, and grant fiscal autonomy to the states.
  • Urbanisation: To build 100 new cities enabled with the latest in technology and infrastructure. The approach to urban development will be based on integrated habitat development – building on concepts like twin cities and satellite towns.
  • Rural prosperity: Encourage rural development through improving village-level infrastructure, job creation, security in rural areas and linkages to markets.
  • Health & education: Public spending on education to be raised to 6% of GDP, with a focus on skill development and employability. On health, provide access and better quality services at a lower cost.
  • Economic revival to be promoted by (a) restoring confidence (b) ensuring fiscal discipline without making compromises on development and asset creation (c) undertaking banking reform and (d) encouraging savings.
  • Boost manufacturing sector: Rationalise interest rates and have a clear tax policy; facilitate setting up of software and hardware manufacturing units.
  • Tax reform: Adopt a goods and services tax (GST), rationalise and simplify the tax regime and provide tax incentives for investments in R&D.
  • Foreign direct investment: FDI to be allowed in all sectors needed for job and asset creation and infrastructure, barring in multi-brand retail.
  • Agriculture development: Increase public investment in agriculture, encourage higher productivity through better irrigation techniques and reform the Agriculture Produce and Marketing Act.
  • Land acquisition: Adopt a ‘National Land Use Policy', which would look at the scientific acquisition of non-cultivable land and its development.
  • Infrastructure: Expedite work on the freight corridors and attendant industrial corridors, national highway construction, connect all villages through all-weather roads, port and airport development, set up gas grids, national optical-fibre network and modernise railways. A low-cost housing programme is also planned.


  • Expanding the rights-based program –
    to offer the right to housing and
    the right to healthcare
  • Committed to higher support prices for farmers
  • Infrastructure and growth
  • Independent regulator for natural resources
  • 100% electricity access in urban areas and 94% in rural areas
  • Restore real GDP growth to above 8% within the next three years
  • Set up the National Investment Facilitation Panel headed by the Prime Minister
  • Invest $1 trillion in the infrastructure sector over the next decade
  • Achieve 10% growth in the manufacturing sector
  • Job creation and growth
  • To unveil a new job creation agenda
  • To create consensus on private sector job reservation
  • Fiscal and tax policies
  • Aim to reduce the fiscal deficit to 3% of GDP by FY17
  • Implement Goods and Services Tax (GST) and Direct Tax
    Code (DTC) within one year
  • Give subsidies only where absolutely necessary
  • Abolish all export taxes
  • Ensure risk of retroactive taxes is avoided. Ensure foreign companies
  • pay tax where profits earned
  • Price stability and financial sector reforms
  • RBI must balance price stability and growth concerns
  • Immediately implement all the recommendations of the
    Financial Sector Legislative Reforms Committee (FSLRC)




shadi katyal

3 years ago

The manifesto will come in action when after Ram Temple is
completed or before.
There is nothing about reformation about Labour Laws, Union and changes in industrial policy . Will the permi9t raj and all the road blocks to discourage investment continue.
Where is the talk of taking immediate action against the crooks contractors etc.
It seems RSS under the umbrella of BJP will not have time to do anything but promote Hinduvta and build the temple. Will the saffron clad Babas and Yogi allow such changes????

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