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Global markets: Reserved optimism - Views on News from Equitymaster
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  • Apr 19, 2003

    Global markets: Reserved optimism

    US markets closed the shortened week on a positive note. Investors encountered earnings reports from leading US companies and this was the main consideration for their investments in the current week. For the whole week the Dow closed up by 2% while the NASDAQ gained by around 5%. The week started on a positive note as blue chips like IBM and Citi group announced their first quarter results largely in line with analyst expectations. Tuesday saw marginal gains on the US indices due to weak economic reports as well as weak earning forecast from blue chip General Motors.

    Wednesday was mixed for the US markets, better than expected results of Intel Corporation and Microsoft Corporation saw gains on the NASDAQ, while lackluster results from Coca Cola and Altria dampened the mood on the Dow. Better economic numbers in the form of housing starts and consumer price index did not have much of an impact on the largely lackluster investor sentiment on Wednesday.

    Thursday however the US markets recovered ground handsomely. Investors seem to have already discounted weak economic news (in the form of higher unemployment figures) and hence poor economic data did not dampen the investor sentiment. On the earnings front telecom handset major Nokia reported better than expected earnings. We must however point out here that earnings estimates for corporate America have already been revised downward in the past and hence this may not have been a surprise. Sun Microsystems also announced its results, but failed to impress investors due to its mixed performance. The next week will be crucial as more earnings numbers are expected and this may significantly shape investor mood for the short term for the long term however economy is the key.

    Indices 12-Apr-03 19-Apr-03 Change
    FTSE 3,808 3,889 2.1%
    Nikkei 7,816 7,875 0.7%
    BSE 2,998 2,985 -0.4%
    Hang Seng 8,646 8,579 -0.8%
    NASDAQ 1,359 1,426 4.9%
    Dow 8,203 8,338 1.6%
    Dax 2,734 2,900 6.1%

    Among global markets, western indices gained ground while their Asian counter parts lost marginally. The swift end to the war and refocus on the state of the economy has seen investors return to the stock markets. The Indian BSE on the other hand was plagued by further weakness in software counters as Wipro reported FY03 results that were below investor expectations. Weakness spread across the board on the Indian bourses and hence the overall gloom. Nikkei was the only gainer among Asian indices in the list.

    (Price in US $) 12-Apr-03 19-Apr-03 Change
    Satyam Infoway 4.1 4.3 3.9%
    ICICI Bank 5.9 6.0 2.0%
    Dr. Reddy's 19.5 19.4 -0.7%
    Wipro 21.2 21.6 1.7%
    VSNL 3.1 3.2 2.6%
    MTNL 4.1 4.1 0.7%
    Infosys 40.5 43.6 7.8%
    Rediff 3.2 3.7 15.0%
    HDFC Bank 15.9 16.0 1.1%
    Satyam 7.5 7.4 -1.3%
    Silverline 1.3 1.1 -21.6%

    Most of the Indian ADRs were in the positive zone for the current week. Software stocks especially Wipro and Infosys recovered after the carnage last week. This is despite the lackluster results announced by Wipro in the current week. A lot of negative correction (for software ADRs) had already occurred in the last week. Banking ADRs gained further ground. HDFC Bank reported robust but expected results for FY03. This buoyed sentiment in favour of this stock. ICICI Bank bounced back from lower levels after it lost ground last week, due to negative speculation of its financial health. Going forward as the results season has started in the India also the performance of Indian ADRs will to a large extent depend on the results news emanating from India.



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