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War news hits Indian ADRs

Feb 17, 2001

The NASDAQ continued its roller coaster ride and lost sheen towards the fag end of the week. Continued earnings warnings and the latest news that the US and British war planes hit Iraqi defense facilities pulled down the markets. The index closed lower by 1.8%, erasing an early week rally, which was fueled by technology shares. During the week, a list of companies including Emulex Corp., Applied Materials, JDS Uniphase, Hewlett Packard, Nortel Networks and Dell Computers forecasted lower profits in the wake of a slowing US economy. On the other hand optical networking product companies Sycamore Networks and Ciena Corporation reported better than expected quarterly results. The positive news on the economy front included retail sales report showing strong consumer spending and modest improvement in business inventories. However, report indicating a drop in industrial output by 0.3% spoiled the mood of the markets.

Sify shines
(Price in $) 10-Feb-01 17-Feb-01 Change
Infosys 111.1 108.5 -2.3%
Satyam Infoway 5.3 5.4 1.8%
Rediff 4.9 4.4 -10.3%
Silverline 11.1 10.5 -5.6%
VSNL 14.9 14.0 -5.8%
ICICI Bank 8.8 7.2 -18.1%
ICICI 12.9 12.7 -0.9%
Wipro 62.5 62.0 -0.8%

Indian ADRs retreated sharply in line with the NASDAQ trend. ICICI Bank and Rediff were the major losers. Volumes on almost all the counters dried up substantially.

Technology ADRs lost steam thanks to earnings warnings issued by major US companies. Nevertheless, fundamentals of the Indian software companies continue to remain strong. The disinvestment hopes failed to generate buying interest in VSNL’s counter.

Sify however, bucked the trend and was up by 1.8%. The stock currently gets a premium of 20% compared to its issue price.

Almost all the indices gave up the gains in the past week. Dow gained marginal 0.2% fueled by some buying interest in old economy stocks. This reflects the re-shuffling of the portfolio by market movers in favour of old economy stocks from highly valued tech stocks.

The war hits markets
Indices 10-Feb-01 17-Feb-01 Change
NASDAQ 2,471 2,425 -1.8%
Dow 10,781 10,800 0.2%
Hang Seng 15,873 15,630 -1.5%
Nikkie 13,423 13,175 -1.8%
BSE 4,397 4,330 -1.5%
Click here for detail view on ADR


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