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Global markets: Earnings up, markets down

Jan 24, 2004

Robust earnings reports continued to trickle in to the US markets but the investors used this as an excuse to book profits and as a result for the week ending January 23, 2004, Nasdaq edged lower by 1% and the Dow suffered a marginal decline. In the process both the benchmark indices broke multi week winning streaks. On account of a holiday on Monday, the week's proceedings got off to a delayed start and mixed trends were witnessed on Tuesday. While the Dow suffered a decline of nearly 1%, Nasdaq ended marginally higher on the back of revival of interest among telecom stocks. However, the trend got reversed in the next two days as the investors used robust earnings report from tech majors as an excuse to rotate their money from tech to blue chips, thus helping the Dow to post gains. While mixed indications from the chip industry helped Nasdaq to close just above break even on Friday, Dow lost nearly 1% on account of profit booking among most of the member stocks and thus capped off a week that remained strong on earnings reports but weak on market gains.

Indices 16-Jan-04 23-Jan-04 Change
NASDAQ 2,141 2,124 -0.8%
Hang Seng 13,168 13,751 4.4%
Nikkei 10,857 11,069 2.0%
BSE-Sensex 5,946 5,817 -2.2%
FTSE 4,488 4,461 -0.6%
Dow 10,601 10,568 -0.3%
Dax 4,112 4,152 1.0%

Other major indices across the world displayed mixed trends for the week. After losing more than 100 points mid way between the week, Japanese markets bounced back on Friday. Firming of the Yen against the dollar could have been a contributing factor. The Indian benchmark index also broke the three-day losing streak on Friday, but the gains were not enough to wipe out the complete deficit and as a result ended 2% lower for the week. European indices ended almost flat for the week, as exhaustion seems to be setting in after the markets edged to their 17-month high levels on expectations of solid earnings news.

(Price in US$) 16-Jan-04 23-Jan-04 Change
HDFC Bank 32.0 32.5 1.6%
Wipro 50.4 57.1 13.3%
Satyam 23.3 27.5 18.0%
Infosys 90.5 93.5 3.3%
Satyam Infoway 9.3 8.0 -14.0%
Dr.Reddy's 30.2 31.7 5.0%
Silverline 1.1 1.1 0.0%
ICICI Bank 16.0 16.7 4.4%
Rediff 9.6 8.6 -10.4%
MTNL 7.4 7.1 -3.5%
VSNL 7.5 7.6 1.3%

Among the Indian ADRs, tech majors emerged as the major gainers during the week. The companies have reported robust 3QFY04 numbers and hence the optimism behind the ADRs. Pharma major Dr Reddy also gained significantly; perhaps on the back of anticipation of good quarterly numbers, as most of the pharma companies have posted impressive results. Banking and telecom ADRs, however, showed mixed trends. Dotcom ADRs had gained substantially over the past few weeks and hence the much-expected profit booking resulted in ADRs witnessing significant declines over the week.


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