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ADRs: Reason to cheer - Views on News from Equitymaster
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  • Apr 21, 2001

    ADRs: Reason to cheer

    Although the week started on a negative note the U.S bourses saw an impressive turnaround after being hammered down consistently since September '00. Both the benchmark indices, Dow Jones Industrial Average and the NASDAQ registered handsome gains. The last day trading saw profit booking as participants thought it wise to lock into profits as all uncertainties in the economy have not been ironed out.

    The early part of the week was marred with continued earning warnings led by Cisco, which revised downwards its quarterly revenues by 30%. However, there was a reversal in sentiments with several old and new economy companies matching or beating expectations. They include Intel, IBM, General Motors, International Paper, AOL-Time Warner, Coca-Cola Inc and Johnson & Johnson.

    ($) 12-Apr 20-Apr Change
    Infosys 56.5 63.0 11.5%
    Satyam Infoway 3.1 4.0 31.4%
    ICICI 10.5 12.2 15.5%
    ICICI Bank 7.1 7.4 4.8%
    Wipro 23.8 29.0 21.6%
    VSNL 12.7 13.4 5.1%
    Dr. Reddy's 10.2 11.3 10.1%
    Silverline 3.1 4.1 34.0%
    Rediff.com 2.7 4.2 53.3%

    The kicker for the markets, however, was from unexpected quarters as the Federal Reserve Chairman, Alan Greenspan announced a surprise rate cut of half a percentage point. The Fed has slashed interest rates for the fourth time in 2001. This takes the aggregate interest rate cut to 2 percentage points for the year. The fed fund rate and bank rate have been reduced to 4.5% and 4% respectively. With the announcement the markets heated up and rallied strongly for the next two days.

    All the Indian ADRs performed well during week. In fact, each of them have beaten the Dow Jones average. Rediff.com was a key gainer during the week. This could be due to the results announced by the company. Rediff has reported more than 190% growth in revenues for the year ended March 01. Its loss for the period also declined by 4% to $6.4 million. The company has resorted to tightening its belt to keep cost strictly under control.

    Indices 12-Apr 20-Apr Change
    Dow 10,126.9 10,579.9 4.5%
    Nasdaq 1,961.4 2,163.4 10.3%
    Nikkei 13386 13765.67 2.8%
    Hang Seng 12989 13448.13 3.5%
    Sensex 3184.8 3583.04 12.5%

    International markets had a favourable week after many a moons. Many of the participants in the international markets are looking at this as a possible turnaround and that the markets have bottomed out. However, a rate cut from the Fed also indicates that all's not well. Any negative news could push markets down again.



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    Aug 18, 2017 03:13 PM