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Global markets: Lackluster week - Views on News from Equitymaster
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  • Apr 10, 2004

    Global markets: Lackluster week

    Concerns over first quarter earnings reports and resurgent geo political concerns cast its effect on the US markets over the last week and as a result both the Dow as well as Nasdaq ended the week almost unchanged. Holiday shortened week due to a three day Easter weekend also added to the lackluster trade.

    On account of robust employment report and expectations of bullish earnings from US Inc, the stock markets witnessed a strong Monday and started the week on a positive note. However, when aluminium giant Alcoa posted disappointing results and communications major Nokia gave profit warnings, analysts started doubting the bullishness behind the earnings forecast and as a result markets experienced pressure on Tuesday and Wednesday. However, a better than expected earnings report from dotcom major Yahoo and strong forecasts from Dell on Thursday alleviated fears to an extent and led to a Thursday morning rally. The bullishness lost steam later in the day on account of renewed geopolitical concerns and as a result markets ended the week almost flat. With a slew of big ticked earnings reports expected to be released next week, it would be interesting to see which way the markets would move.

    Indices 2-Apr-04 9-Apr-04 Change
    NASDAQ 2,057 2,053 -0.2%
    Hang Seng 12,732 12,909 1.4%
    Nikkei 11,816 11,898 0.7%
    BSE 5,788 5,838 0.9%
    FTSE 4,466 4,490 0.5%
    Dow 10,471 10,442 -0.3%
    Dax 4,008 4,014 0.1%

    Among the major indices across the world, both the European as well as Asian indices ended up higher for the week. However, Hang Seng, the Hong Kong benchmark index, registered the highest, 1% gain. Japanese benchmark, Nikkei, after registering a fresh 32-month high on Thursday, witnessed decline on Friday following news regarding the capture of its nationals in Iraq. European indices on the other hand witnessed modest gains on the back of strength in tech stocks, which in turn gained on the back of robust earnings report from Yahoo and bullish forecast from Dell. The Indian benchmark index, BSE, also ended the week with near 1% gains but not before witnessing considerable volatility.

    (Price in US$) 2-Apr-04 9-Apr-04 Change
    Dr.Reddy's 24.3 23.2 -4.5%
    HDFC Bank 31.2 30.7 -1.6%
    ICICI Bank 16.4 16.0 -2.4%
    Infosys 83.0 83.8 1.0%
    MTNL 8.4 8.0 -4.8%
    Rediff 11.1 14.1 27.0%
    Satyam 22.3 21.1 -5.4%
    Satyam Infoway 7.1 8.4 18.3%
    VSNL 9.3 8.6 -7.5%
    Wipro 42.6 42.6 0.0%

    As far as the Indian ADRs are concerned, barring dotcom ADRs and tech major Infosys, all the other ADRs witnessed selling pressure and ended lower for the week. Rediff’s tie-up with Yahoo continued to enthuse investors and as a result the stock registered gains for the second straight week and ended a substantial 27% higher. The tie-up seems to have had a rub-off effect on Satyam Infoway, which also gained 18% over the week. Tech major, Infosys, was the other sole gainer, registering gains of 1%. The ADR gained on the back of news that the company has set up a subsidiary in the US to foray into the business of consulting and this will enable it to move higher up the value chain and continue with its robust growth. All the other ADRs experienced weakness, notable among them being ILD major VSNL, which lost the maximum 8% over the week.



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