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Global markets: Uncertainty continues - Views on News from Equitymaster
 
 
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  • Feb 1, 2003

    Global markets: Uncertainty continues

    US markets were characterized by a significant amount of volatility in the current week. This was mainly due to the worsening situation in the Middle East as well as mixed performance on the corporate front. The prospects of an increasingly inevitable war with Iraq have made US investors increasingly nervous. Lackluster corporate results have further added to the gloom. The only saving grace for the week was better than expected quarterly results announced by Walt Disney and Honeywell.

    The major disappointment for the current week was poor results reported by media giant AOL Time Warner mainly due to a huge US$ 44 bn write off. On Friday, however the markets were perked due to a jump in the Chicago Purchasing Managers' index to 56 in January helped the Dow further. Estimates pegged it at 53 for the month of January. This suggests strength in manufacturing activity in one of the US's key industrial regions. Though the Dow gained in the last day of the week, the sentiment is unlikely to be carried in to the next week. US investors will also be looking at a slew of economic data that is to be released in the coming week. The US secretary of state's address to the UN on Wednesday is further likely to keep investors nervous.

    Indices 25-Jan-03 1-Feb-03 Change
    FTSE 3,604 3,567 -1.0%
    Nikkei 8,732 8,340 -4.5%
    Nikkei 3,288 3,250 -1.2%
    Hang Seng 9,461 9,259 -2.1%
    NASDAQ 1,342 1,321 -1.6%
    Dow 8,131 8,054 -0.9%
    Dax 2,718 2,747 1.1%

    Global markets continued to reel under the fears of a US war with Iraq. Among Asian stocks the Nikkei was one of the major losers. The Indian BSE also lost for the week despite gains made on Friday. Healthy quarterly results posted by Reliance Industries Limited (RIL) on Friday helped the Sensex gain on Friday. Going forward investors can expect volatility in the global markets until there is more clarity on the Iraq issue.

    (Price in US $) 25-Jan-03 1-Feb-03 Change
    Satyam Infoway 4.7 3.6 -23.4%
    ICICI Bank 6.8 7.0 2.9%
    Dr Reddy's 18.8 18.7 -0.5%
    Wipro 29.0 29.0 0.0%
    VSNL 3.5 3.6 2.9%
    MTNL 3.5 4.6 31.4%
    Infosys 63.0 65.0 3.2%
    Rediff 3.9 2.1 -46.2%
    HDFC bank 15.2 15.0 -1.3%
    Satyam 10.6 10.2 -3.8%
    Silverline 0.6 0.6 0.0%

    The main highlight of the current week was the gains made by the MTNL ADR on the US markets. This was mainly due to the revision in the basic telephony services tariffs. The revision is expected to benefit MTNL considerably in the long run. Also the proposed merger with the PSU telecom giant BSNL has come to the fore as a new more market friendly minister has been appointed in charge of the Telecom ministry. Other Indian ADRs remained largely lackluster due to lack of positive triggers as well as a war over hang. ICICI Bank was also one of the major gainers mainly in anticipation of improved performance in the December quarter. Infosys gained mainly due to a technical correction, as the new proposed ADR is likely to be priced near the US$ 66 mark. For the coming week the markets may continue their volatile trend due to the global uncertainty.

     

     

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