Apr 14, 2001|
Tech ADRs: Out of favour
The mood in the US markets finally looked up and the feel good factor seems to be back. Both the NASDAQ and Dow rallied after a heavy sell off in the last one-month. Optimism about corporate earnings and fresh economic data boosted the sentiment on the Wall Street.
On the corporate front, outlook was mixed. The retailing giant Amazon.com expected revenues of $695 million and loss of $225 million for the first quarter. This loss, which is smaller than projected by the markets helped improve sentiment. The surge in the markets was also sparked by an upgrade in rating of the telecom sector by one of investment banker. Motorola however cast a shadow on the rally by recording a loss after 15 years, which was higher than expected. It has also forecasted a disappointing outlook for the second quarter. In the next week more results are expected to come from the tech majors, which would decide the future trend in the markets.
The US economy is showing signs of sliding into recession. This was confirmed by fall in March retail sales and consumer sentiment index. Also, weekly jobless claims were the highest in five years. Nevertheless, the markets considered this data as positive for the Fed to cut interest rates aggressively.
|(Price in $)
Indian ADRs gained selectively. Internet stocks - Sify and Rediff gained smartly. VSNL was also up by 6% over a week on the expectation of speeding up of the divestment process.
Infosys led the downfall in the tech ADRs. The company declared double digit growth in revenues and profits for the year ended March ’01. However, its indication of a marginal 30% growth in the coming year led to a significant sell off in the tech counters. Wipro and Silverline were the other major losers.
During the week, the Indian pharma major Dr. Reddy’s listed on the NYSE at a slight premium of 1% compared to its domestic price. The company has raised US $132.8 million (Rs 6.2 bn) through ADS issue. The proceeds of the issue will be used partly to finance clinical research activities and partly for acquisitions of companies and brands in the related area. Dr. Reddy’s has also obtained the final approval fro the US Food and Drugs Administration (USFDA) for the abbreviated new drug application (ANDA), filed by it for the launch of oxaprozin in the US markets.
The coming week is crucial for the US markets and Indian ADRs as some of the tech majors are expected to announce their quarterly results. It remained to be seen whether the up trend in the markets is sustained.
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