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• This is not a smartphone feature you want to copy: Another phone explodes, this time a Reliance Jio LYF phone. The user Tanvir Sadiq claimed on Twitter that the phone, bought at a Reliance Retail outlet, exploded and caught fire, resulting in a narrow escape for him. The pictures he posted show its charred remains. This is the second LYF phone that is said to have exploded, after the first incident on September 6.

• PNB Housing Finance had a stellar debut today, listing on stock markets with a 11.4% premium after being over-subscribed 29.5 times. The stock, the fifth largest housing loan company in India, had received near-universal 'Subscribe' recommendations from analysts. Punjab National Bank, the biggest shareholder of the company, however reported lukewarm quarter results, with a fall of 11.5% in its Q2 profit. 

• The GST is being turned into a complex regulation, thanks to five tax tiers and multiple exemptions.  A five-slab structure of 0%, 5%, 12%, 18% and 28% has been finalized by the committee. In addition some 'demerit' goods will be taxed above 28%, and cesses applied on them. 

• Stock in spotlight: Lupin Limited is among the top gainer stocks today, with shares rallying over 6% after the company received USFDA clearance for its Goa plant. The company had lost 15% of its value over the last three months after news of legal tussles with US drug maker Horizon over patent ownership of a drug, and is still trading below an average broker target Rs. 1741.

• Photo of the day: A walk in a public park may not be so healthy, on a smoggy Delhi day. Adnan Abidi/Reuters

Indian Pharma took a beating in stock markets on the latest news about US legislators Bernie Sanders and Elijah Cummings demanding a federal investigation into price fixing by generics. Both American and Indian generic firms could potentially face charges if regulators take up an investigation.

The US legislators presented some data showing rising prices for insulin, used to treat diabetes and whose patent expired 75 years ago. They included a chart showing that the price spikes for Humalog and Novalog seemed to happen together over the last twenty years.

Since the news, Sun Pharma, Glenmark,Aurobindo and Dr. Reddy’s stock prices collapsed (Chart 1), with Sun Pharma falling the steepest - more than 11% during morning trading. Sun Pharma and Dr. Reddy’s have been issued subpoenas from the US Justice Department, which requires them to attend a court to testify.  

Chart 1: Drop in Pharma stocks in today's trading on news of the Justice Department investigation

However, price collusion is a difficult charge to prove, especially in a market which depends on insurance payments. US pharma companies have already released statements denying the charges, saying that when one company raises prices the others follow through, since it allows the company to also raise the insurance rebate for the patient. The companies thus see increased profits without passing on price increases to the patient - since the insurer covers the increase. However, the price of medicine has emerged as a political issue during an election year, compelling legislators to pay attention to the price shifts in drugs.

The downward pressure on stock prices present investors a buying opportunity on solid pharma stocks. The first three quarters of the 2015 calendar year were bad for Pharma earnings, but earnings have picked up in the past one year. Nifty Pharma aggregate earnings are up 65% in the past 12 months, even though stocks have fallen in the market overall over the past year.  The sector may be therefore ripe for a re-rating upwards.Valuations are at two year lows, while market valuations in other sectors are at a peak.

Individual stocks- Dr. Reddy's, Glenmark, SunPharma, Aurobindo Pharma

Dr. Reddy’s stock had soared recently on the announcement of its alliance with the US firm Gland Pharma to develop drugs for the US markets. The company’s sales are expected to grow over the next financial years with launches of new drugs like gGleevec and gCopaxone - generic versions of anti cancer and multiple sclerosis drugs, both large multi-billion dollar drug segments.  

Glenmark in particular, may also be less prone to headwinds from the continuing US investigation - its focus is on more niche sectors like oral contraceptives, skin treatments and respiratory care, where it faces less competition. Its debt/EBITDA has improved from a high of 4.6x in FY09 to 2.5x in FY16 as it has expanded its market beyond US and India and to Asia and Europe. And Sun Pharma’s latest quarter results beat expectations on both export and domestic earnings - recent research reports consequently raised recommendations and targets on the stock (Chart 2)

Chart 2:  Sun Pharma saw its targets revised upward in research reports (see the brokerage reports list)

At first glance Aurobindo Pharma also looks strong, with recent approvals for selling multiple generics in the US, including blockbuster drugs to treat osteoporosis and HIV. However, a recent recall of drugs supplied to US market in September due to mixing of two different drugs in a bottle, raises the question of process quality in the company’s Mahboob Nagar plant.

Overall however investors looking for a good entry point into these stocks may very well pick the present, as US legislators with an eye on public sentiment release aggressive remarks that spook markets. Pharma has always been a defensive sector and with the broad market coming off its peak and with today’s meltdown, there may be opportunities in the coming days.

• Threat of a possible proble by US regulators for price collusion has driven down prices of pharma companies on markets today. Glenmark, Sun Pharma and Dr. Reddy's have all lost at least 5% in trading. The Nifty Pharma P/E is now below its two year average. 

• Over 11,000 Indians have signed up to be part of the first 'space nation', Asgardia.  A group of scientists and space experts based out of Russia, Romania, Canada and the US want to make this country - based outside Earth - a reality with a fully formed government structure, including a council of 12 ministers. 

• The government is planning to sell its shares in L&T, selling a 3%bstake worth Rs.4,000 crore. The stock is trading down and at high volumes on the news - more than 58 times its average monthly volumes. 

• Stock in spotlight: Hindalco Industries, which is up 167% from its 52 week low of Rs. 58.85 and is now trading in the Rs. 150 range. 

• Photo of the day: Worrying about weight - a panda cub is weighed at a zoo in Austria. Reuters

• Are we seeing a recovery in demand?: India's manufacturing services activity has grown pretty rapidly in October, thanks to rise in both domestic and foreign demand. Indian factory output is at its fastest pace since the last two years. If this trend holds, RBI may cut interest rates further next month.

• Government services - exams, driving licenses, passports - are going to be more expensive, now that the Finance Ministry has asked departments to raise charges to cover their costs. "Self-sufficiency" is what the Central government is now pushing for, marking a shift in thinking away from the view that these services should be subsidised. 

• While Cyrus Mistry is out of Tata Group's holding company, he is still the Chairman of Tata Power, Indian Hotels and Tata Motors. Tata Sons doesn't have enough stock to evict him from those companies. The dual power structure is likely to make the Tata Sons' successor's job a lot more difficult. 

• Stock in spotlight: Bharti Infratel, whose price has crossed above its 200 day SMA on news of stake sale by the parent company. 

• Photo of the day: A police officer shows schoolgirls the workings of a gun during Raising Day celebrations in Chandigarh. Reuters/Ajay Verma

• Airtel says that rather than lowering prices substantially to combat Jio, its waiting its competitor out, since Jio can't keep offering free services for very long. Airtel CEO Gopal VIttal pointed out that Jio's free services will become paid in January 2017, and only then will Airtel start comparing pricing and consider lower rates for its plans.  

• The US Embassy has issued a travel advisory for those heading to India, amid concerns that ISIS is planning an attack in the country soon. The threats, it said, are to markets, festival venues and religious sites. 

• For the first time in Indian stock market history, mutual funds hold more money than the state-run LIC. Sensex gains in the first half of the year encouraged investors to put money into equity, and at the end of September, the value of mutual fund equity portfolio in listed firms stood Rs.4.94 lakh crore compared toRs.4.75 lakh crore held by LIC. Not only does this show greater faith in equity markets by investors and institutions, it marks a shift in behavior from old-school investing tools and into equity. 

• Stock in view: Punjab National Bank has plummeted in trading today, topping the Top Losers screener, with a fall of -3.83%. Banking stocks are taking a beating in the morning's trading. 

• Photo of the Day: A robotic fish swims in a tank at the Singapore Robot Expo. Roslan Rahman/Getty Images

• This results quarter has highlighted a shifting trend in the Indian industry, where financial and auto stocks have brought light to markets while tech has turned downwards. A good monsoon has helped banks, consumer durables and auto sales, with Eicher Motors being the top gainer among auto stocks. The Nifty IT index is heading for a sixth straight session of losses. The market is also watching global cues, with the U.S. Federal Reserve's meeting set to begin on Tuesday, which could provide clues on a December rate hike, and the upcoming US election on November 8. 

• The outcry over the removal of an iconic Vietnam War photograph by Facebook has compelled the company to say that its reviewing its content policies and will allow more content that is currently censored. This has come after an protests by human rights groups, who say that FB regularly censors material which might annoy governments. 

• Andhra Pradesh and Telangana now top the nation in the Ease of Doing Business Index, while Maharashtra has fallen from the 8th to 10th place. Gujarat has lost its number one ranking. 

• Stock in spotlight:Vedanta tops the Top Gainer screener today. The company has gained over 20% in the past month. over strong operating performance during the quarter. The company had struggled with recent problems of power outages and labor unrest. 

• Photo of the day: A popular 'scary costume' this Halloween is a phone - the Samsung Galaxy Note 7. A participant walks on a street in Japan in the costume. Reuters/Kim Kyung-Hoon

• The highly public argument between the Tata group and ousted Chairman Cyrus Mistry escalated, with Tata sons accusing Mistry of 'malice' and 'unsubstantiated allegations'.  Mistry's parting shot at the conglomerate had taken aim at precisely the things that the Tatas long claimed as strengths - its corporate governance, and its transparency. Mistry's five-page long, tighly spaced letter brought up issues of fraud, non-performing assets and failing products. 

• Riding high: Maruti has logged an impressive September quarter performance, with an expanding operating margin and net revenues up by 29.28%. The company however has predicted falling margins for the next quarters due to rising raw material costs. The stock has been up in early trading and remains well above its 200 day averages.

• India wants to go slow on cutting existing duties and tariffs on Chinese goods coming into the country - India now has a massive trade deficit with China, exporting $9 billion worth, while Chinese imports were over $61.7 billion, and India's concerns over the rising deficit may push it to slow down the phasing out of tariffs required under current trade agreements.

• Stock in spotlight: Bank of Baroda, which crossed above its 150 day average price today.

• Photo of the day: A Kurdish fighter takes a selfie with kids after freeing a village in Iraq from ISIS forces. Note the t-shirt that says 'Abibas'. Guardian/Reuters

A very interesting indicator in stock markets is something called the Relative Strength Index. This is a tried and tested indicator that has been around since the late 1970s, and focuses on momentum: while indicators like the SMA look at average prices of stocks, the RSI looks at the speed with which stock prices are changing. The Relative Strength Indicator is calculated from the average gains the stock has made over a short period of time, compared to the average losses.

The resulting RSI for a stock varies from 0 to 100. An RSI number over 70 means that the stock is ‘overbought’ - i.e. its demand and gains are too high, and the price is not justified. An RSI number below 30 means that the stock has fallen too sharply and is ‘oversold’, i.e. its current price is likely below its real value. There are buying opportunities in oversold stocks.

Arvind Ltd for example, riding high on Q2 results, figures in the RSI overbought screener with an RSI score of 79+, suggesting that the stock is overbought at a price that is difficult to defend, and the stock has been gaining sharply over the past few days.

Axis Bank on the other hand, has been pummelled badly in the stock market after its Q2 results yesterday showed much higher bad loans than expected, and the RSI score of 28.7 suggests that the stock is now oversold, and the price is below its real value.

Another popular indicator related to the RSI is the Money Flow Index. The MFI is essentially the RSI plus volume. This looks at price changes as well as the volume of money going into the stock, and the money going out, to calculate the MFI. An MFI level above 80 means again, that the stock is overbought and may not justify its current high price, while an MFI below 20 means that it’s oversold.

Great Eastern Shipping for instance has turned up in the MFI overbought screener list with a score of 93, and the stock has already started seeing pullback. The company had been trading over its 200 day SMA. On the other hand, Asian Paints with an MFI of 14.34, has landed in the oversold list, struggling on the back of Q2 results that showed rising input costs.

An overly exuberant or pessimistic reaction from investors to a company’s financial results or management remarks can often propel a stock up and down. The RSI and MFI are momentum indicators that can help show excessive optimism or pessimism for a particular stock. It helps investors identify companies that are being overvalued or undervalued by the crowd, and respond accordingly.       

Note: RSI and MFI have to be used in conjunction with other parameters like MACD to get exact entry and exit points. For eg. Axis bank which figures in Low RSI implying oversold has an MACD and MACD signal of -15.07  and -13.67 respectively - implying that the worst is not over for the stock. Will discuss this interaction in an upcoming post. 

Links: RSI and MFI screeners 

• A corporate drama is playing out in the open, with Cyrus Mistry alleging that former Chairman Ratan Tata was pulling the strings backstage all along, reducing him to no more than a puppet. He highlighted bad decisions to keep debt-ridden businesses like the Nano car going, and was allegedly asked to ignore fraudulent transactions - things that suggest all is not well with the Tata Group's balance sheets. Tata companies have taken quite a beating in the stock markets as a result, losing Rs. 50,000 crore in market cap since the inter-management war broke out. Tata Motors has taken the biggest dive, losing Rs. 32,000+ crore in shareholder wealth, and TCS saw its 50 day average fall below its 200 day. 

• Chanda Kochhar has come out bullish for AI, saying that robots and artificial intelligence are reducing ICICI's error rates, and have also been cost-effective. ICICI has been particularly aggressive with AI investments, recently announcing that 20% of front office work is being automated in the bank. 

• Stock in spotlight: Hindustan Unilever saw a dip in sales volume in its quarterly results for the first time in over seven years (30 quarters). The company saw sales fall in when it increased prices due to the rise in commodity costs. The company is currently trading below its 200 day SMA. 

• Photo of the day: An abandoned airplane becomes a home to squatters in Bangkok, Thailand. Lauren Decicca/Guardian

• Axis Bank has flunked its exam, missing its guidance on bad loans. In March, Axis Bank had released a “watch list” of corporate accounts that could go bad, which amounted to Rs. 22,628 crore. Axis gave a clear guidance that 60% of this watch list could go bad over eight quarters. But as of the end of the September quarter, nearly 40% of its watch list has turned bad. The Bank is no longer standing behind its earlier 60% guidance. Shares of the bank are sharply down, 8% lower on these results.

• Despite the new initiatives, India's rank in Ease of Doing Businessimproved by just one spot on World Bank's ranking, from 131 to 130. However, the Bank only acknowledges reforms implemented by June 1 every year, and the government noted that a host of bankruptcy related, tax code and business entry/exit related reforms were not taken into account for the rankings. 

• Flipkart CFO Baweja has resigned, continuing the list of high-profile exits from the company; the exit happens at a crucial time for Flipkart, at the height of festival sales and as the company is negotiating a partnership with Walmart in the Indian market. 

• Stock in spotlight: Kotak Mahindra Bank is trading up on strong Q2 results, and is among the top gainer stocks today.

• Photo of the day: A woman walks past semi-finished clay statues in Kolkata. Reuters/Rupak de Chowdhuri