The NASDAQ witnessed a roller coaster ride in the last week. The index lost more than 4% over a week on the continued weakness in the technology stocks. This was due to dwindling corporate earnings amidst a slowing US economy.
Mid week, the Federal Reserve announced a rate cut of 50 basis points both in federal fund and discount rate. Lower interest rates are expected to boost the sluggish economy from a further slow down. The rate cuts were as per expectations of the markets. This resulted in profit booking after the announcement because the good news seemed to have been already factored in. Meanwhile Dow was up by 2% on the upbeat earnings forecast from consumer products major P&G.
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Indian ADRs gained selectively with large volumes in most of the counters. Rediff, Silverline and VSNL were the major gainers. The rally in Rediff was fueled by strong third quarter performance of the company. The ADR is still trading at a discount of more than 50% compared to its domestic price.
VSNL gained sharply on the news of government hastening the disinvestment process. It was among the most active stock among the Indian ADRs. The government announced that it would sell 25% of its 53% stake in the company to a strategic partner and 1.9% to employees. It would keep a 26% stake in the company. This is very positive news since the government has lowered its stake to 26% in one stroke, rather than in phases. Nevertheless, the fundamentals of the company are not very encouraging.
Wipro also attracted some buying interest towards the fag end of the week after the stock received a long-term buy rating by one of the key foreign broking houses. The ADR is trading near to it domestic price.
Satyam Infoway slipped after it announced disappointing quarterly results. The company has declared a jump of 115% in revenues for the third quarter ended December ’00. However, its loss during the period increased to $18.4 m from $13.2 m in the corresponding previous quarter. The counter witnessed large volumes in the previous week.
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