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Global markets: US and Asia gain

Jan 10, 2004

On the back of expectations of a strong fourth quarter earnings report from the US companies, the first full trading week of the year 2004, ended in gains for the benchmark indices. For the week ending January 9, 2004, while the tech laden Nasdaq rallied strongly and gained 4%, Dow inched higher by a near 1%. Monday, the first trading day of the first full week of 2004 was witness to some pretty strong buying on the back of a strong economic report and an upbeat forecast from Siebel as well as a strong semiconductor industry data. As a result, Nasdaq gained 2% and was pushed to a new almost two-year high and Dow ended 1% higher and reached its best levels in more than 20 months.

Despite a decline in Institute of Supply Management's services index, the Nasdaq continued its upward climb on Tuesday while Dow ended little changed. On Wednesday, for the fourth trading day in a row, the Nasdaq edged higher and carved out a new 30 month high. The Dow however, suffered a decline, as investors appeared to be rotating their money from the Dow into the Nasdaq.

A fresh 30-month high was carved out by Nasdaq on Thursday as the news about upbeat fourth quarter earnings continued to gain ground. The Dow also closed at its highest level since March 2002. However, the week ended on a rather sedate note as weaker than expected payrolls numbers resulted in the indices experiencing weakness on Friday. But the decline was unable to wipe out the gains made by Nasdaq as well as Dow earlier in the week.

Indices 2-Jan-04 9-Jan-04 Change
NASDAQ 2,007 2,087 4.0%
Hang Seng 12,802 13,386 4.6%
Nikkei 10,677 10,965 2.7%
BSE-Sensex 6,027 6,120 1.5%
FTSE 4,510 4,466 -1.0%
Dow 10,410 10,459 0.5%
Dax 4,019 4,016 -0.1%

While the Asian indices reflected the gains of their US counterparts, the European indices ended lower for the week. Following in on another tech rally in the US and firming up of Dollar against the Yen, Asian stocks, especially that of export-oriented companies witnessed strong buying interest. Aided by strong buying interest for Hutchison Whampoa and big bank HSBC, Hong Kong's benchmark index Hang-Seng emerged as the lead gainer for the week. Indian benchmark index BSE witnessed yet another landmark as it touched an all time high on Friday, before retreating to close below those levels. In the European markets however, doubts over the quality of US economic recovery had its impact on the markets, as both the UK benchmark FTSE as well as the German Dax ended lower for the week.

(Price in US$) 2-Jan-04 9-Jan-04 Change
HDFC Bank 31.8 33.1 4.1%
Wipro 51.7 52.6 1.7%
Satyam 32.2 29.2 -9.3%
Infosys 99.3 98.1 -1.2%
Satyam Infoway 6.2 7.5 21.8%
Dr.Reddy's 32.2 30.5 -5.3%
Silverline 1.1 1.1 0.0%
ICICI Bank 18.3 16.1 -12.2%
Rediff 6.2 7.2 16.1%
MTNL 7.4 7.7 4.1%
VSNL 7.9 8.0 1.3%

Despite buying interest for tech stocks in US markets, Indian tech ADRs, barring Wipro, suffered declines for the week. Pharma major Dr Reddy's also ended the week in the red. Dotcom and telecom ADRs once again generated buying interest and as a result ended the week with gains. These were the stocks that seemed to lag the overall rally and therefore are generating buying interest as investors search for probable under performers. As a result, Satyam Infoway and Rediff registered impressive double-digit gains of 22% and 16% respectively. Telecom majors, VSNL and MTNL, ended higher by 1% and 4% respectively. Mixed interest however, was exhibited among banking ADRs as HDFC Bank gained 4% while ICICI Bank ended the week 12% lower.

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