The NASDAQ slide continued for the second consecutive week. The index lost more than 7% over a week. The reason for nervousness in the markets this week was the same, earning concerns for tech stocks in the wake of slowing US economy.
The stocks, which pushed up the NASDAQ, also led to a fall of the index. Dell, Intel, Cisco, Lucent and Microsoft gave up all their gains made since the beginning of the year. Cisco reported a 48% growth in earnings on the back of a 55% jump in revenues for the quarter ended December 2000. Nevertheless, the performance of the company was below market expectations. Apart from this, one of the key investment bankers gave a downgrade to Microsoft due to a slowing demand for personal computers. The negative news continued to cloud around the markets and there seems to be no catalyst to drive tech stocks.
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Indian ADRs displayed a mixed trend with thin volumes. ICICI Bank, ICICI and Wipro gained smartly.
ICICI Bank was in focus on the hopes of interest rate cuts by the RBI. The reduction in interest rates is expected to improve the interest spread of the bank as it will reduce the deposit rates but may not re-price the lending rates proportionately. Also, the rate cut could result in rise in investment portfolio of banks and financial institutions, pushing up their profit growth.
The rally in VSNL fizzled out as investors opted to book profits at higher levels. Internet stocks also lost ground on selling pressure. Rediff and Sify gained marginally at the beginning of the week but wiped out all their gains amidst weak sentiment on the NASDAQ. Rediff has re-launched its site rediff.com to make it more user friendly and Sify announced opening of 13 more Internet gateways in India. It has already opened 4 gateways.
Wipro was up marginally. The company has launched its suite of solutions, OSS Smart, for operation system support service providers. One of the component of the package, which is web enabled facilitates in rapid integration of operation system support with business support system applications. This solution is largely for telecommunication companies and ISPís. According to Gartnerís (research agency) projections, OSS market is expected to grow at a CAGR of 39% to US$ 6.3 bn in 2003. This offers good growth opportunity to Wipro.
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