Dr Reddy’s Laboratories closed at a record high of Rs 3,397.15 on the BSE on Friday, up 4.42% from the previous close, the highest single-day gain since July 2013.
The stock climbed as much as 6.2% intra-day, on the back of the company receiving US FDA approval for a generic version of antiviral drug Valcyte. The scrip has closed higher on each of the last five trading sessions, having gained 12% during the period.
The announcement of the US FDA approval comes a day after Ranbaxy Laboratories said it has lost its 180-day marketing exclusivity on the drug after the US regulator withdrew the previously-granted tentative approval. A Dr Reddy’s spokesperson confirmed that the launch was expected shortly, but did not specify the dosages for which the approval was received or whether it had marketing exclusivity in the US.
Reuters reported US FDA as saying on Friday that there were no companies with such sales exclusivity for Valcyte generic anymore.
Bloomberg Intelligence pegs Valcyte US sales for CY13 at $388.04 million. Ranbaxy said on Thursday that the US FDA had withdrawn tentative approval for two drugs, Valcyte and acid-reflux blockbuster therapy Nexium.
So far in 2014, the stock has generated a return of 34.11% against the benchmark Sensex return of 32%.
In the last 12 trading sessions, top five BFSI firms have collectively added close to 851 points to Sensex’s 1,917-point ascent since October 17, 2014. This represents a near 45% contribution to gains in the 30-share benchmark. The country’s largest lender, State Bank of India (SBI), gained 2.2% on Wednesday to close at R2,782.25 — the highest in three-and-a-half years. ICICI Bank, India’s largest private sector lender, and HDFC, the largest bank by market capitalisation, ended at historic highs.
Analysts said growing expectations of rate cut by the Reserve Bank of India (RBI) at the next policy review have backed the recent rally as has the growing interest of foreign portfolio (FPI) investors in banking stocks. Overseas investors are betting BFSI stocks to be at the heart of the market rally. A pick-up in credit growth will play a pivotal role in an up-turn in economic growth that is envisioned by the government, they said. Credit growth has recovered to 11.16% after a hitting a decade low of 9.7%. Banks are targeting a credit growth of 12-15% for full-year FY15.
The inclination towards banking shares was also seen replicated in the previous two rallies in May 2014 and August-September 2014, when banking stocks contributed about 25-40% at a time when benchmark indices surged more than 7% in a span of 12-19 days. Between May 8 and 23, the Sensex had gained 2,369 points, or 11%. SBI had contributed more with 260 points, followed by ICICI Bank with 248 points. All the banking stocks have outperformed the Sensex so far this year with a return ranging between 37-76%. The Sensex gained 32% in the same period. On Wednesday, the BSE Bankex closed at record high 19,872.26, up 1.41%. Axis Bank was the top performer in the sector with 2.93% gains, followed by SBI. Among the banking stocks, Axis Bank gained the most with 76% return in CY14.