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Global markets: Investors gaining confidence - Views on News from Equitymaster
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  • Apr 5, 2003

    Global markets: Investors gaining confidence

    US markets closed in the positive for the current week. This was mainly due to significant gains made on Tuesday and Wednesday. While the markets remained more or less lackluster for the remaining part of the week, the gains made on these two days were enough for pushing the US markets in the positive zone.

    The week started on a weak note as the US markets fell considerably due to war concerns and fears of a slowdown in the manufacturing sector. The Chicago Purchasing Managers' index fell to 48 in March from 55 in February. Any reading below 50 indicates manufacturing activity is contracting. However on Tuesday investors brushed aside the negative economic news to bring about a rally on the US markets. The adverse news on the economic front came in the form of The Institute for Supply Managementís March index measuring manufacturing activity in the US. The report indicated that the index reading came in at 46.2, compared with the previous month's 50.5. Anything below 50 indicates the manufacturing sector is contracting. A reading below 42.7 over a period of time also implies the entire economy, as expressed by gross domestic product, is declining. However investors did not seem to dwell much on this and effected a rally on Tuesday.

    US markets gained significant ground on Wednesday too. The Dow gained by nearly 3% while the NASDAQ gained by close to 4%. The renewed optimism was on account of significant gains made by the coalition forces in Iraq. US forces seem to be very close to Baghdad and this has cheered investors as they expect a speedy end to the war. On the last two days of the current week the markets traded lackluster. Investors were also treated to bad news regarding the unemployment figures in the country. Nearly 108,000 non-farm jobs were lost in the month of March, keeping the unemployment rate at 5.8%. Going forward volatility is likely to persist in the US markets.

    (Price in US $) 29-Mar-03 5-Apr-03 Change
    Satyam Infoway 3.9 3.8 -2.0%
    ICICI Bank 6.5 6.7 3.4%
    Dr. Reddy's 19.5 19.5 -0.2%
    Wipro 29.0 29.6 1.9%
    VSNL 3.2 3.4 4.7%
    MTNL 4.1 4.2 2.4%
    Infosys 64.0 61.8 -3.5%
    Rediff 2.9 3.2 13.0%
    HDFC Bank 15.8 16.9 7.0%
    Satyam 9.0 8.9 -1.2%
    Silverline 1.7 1.6 -3.0%

    Global markets too reflected the positive sentiment. Major Asian markets however weak. This may have been due to the concerns over the outbreak (SARS) and its economic ramifications in the Asian region. Indian markets too gained ground in the last week. The major gainers during the week were the banking stocks, which witnessed renewed interest as there were indications that the RBI may cut the bank rate further in order to fuel an increase in credit off take from corporate India.

    Indices 29-Mar-03 5-Apr-03 Change
    FTSE 3,709 3,814 2.9%
    Nikkei 8,280 8,074 -2.5%
    BSE 3,116 3,168 1.7%
    Hang Seng 8,863 8,822 -0.5%
    NASDAQ 1,370 1,384 1.0%
    Dow 8,146 8,277 1.6%
    Dax 2,521 2,654 5.3%

    Indian ADRs were largely positive for the week. Software majors Infosys and Satyam lost ground, while Wipro gained ground. Banking stocks were the star performers for the week with HDFC Bank gaining by 7% while ICICI Bank gained by over 3% over the week. Positive sentiment regarding these stocks has been seen in the Indian markets and this seems to have caught on with US investors too. Telecom counters too caught the investor eye with MTNL and VSNL gaining significant ground. While all the major markets have gained during the last week, there could be volatility going forward as war news trickles in.



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