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Global markets: Dull sentiments prevail - Views on News from Equitymaster
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  • Apr 26, 2003

    Global markets: Dull sentiments prevail

    The current week was clearly dominated by economic numbers that indicated a mixed trend. And on the lines of the economy the Dow and NASDAQ closed for the week in a mixed fashion. The Dow lost ground marginally while the NASDAQ gained marginally. The week started on a lackluster note due to apprehensions regarding the fate of corporate America in the March quarter. There were also apprehensions that economic numbers could indicate a slowdown in growth. US markets however bounced back on Tuesday mainly driven by positive earnings reports. News regarding the likely extension of the term of Federal Reserve chairman Alan Greenspan also perked up sentiments.

    US markets consolidated their gains again on Wednesday. Better earnings reports from majors like AOL, Boeing and AT&T and online retailer e-bay (on Tuesday after market hours), perked investor sentiment on the bourses. The gains were however limited due to profit booking seen in certain stocks. On Thursday however markets fell due to indications of a contraction of the labour market, pointing to a grim unemployment scenario. Profit booking pushed markets further in to the red. Investors extended their pessimism to Friday too as the GDP growth numbers released by the commerce department disappointed them. The commerce department reported a 1.6 % GDP growth rate for the first quarter of 2003. This was in comparison to the fourth quarter's GDP growth rate figure of 1.4%. While it was first quarter estimate was higher than the last quarter, it seemed to be well below expectations. US markets are likely to remain range bound in the short term, due to uncertainties surrounding other corporate results and the economy in general. But the downside from here seems limited as already investors seem to have factored much of these expectations.

    Indices 19-Apr-03 26-Apr-03 Change
    FTSE 3,889 3,870 -0.5%
    Nikkei 7,875 7,700 -2.2%
    BSE 2,985 2,924 -2.0%
    Hang Seng 8,579 8,409 -2.0%
    NASDAQ 1,426 1,435 0.6%
    Dow 8,338 8,306 -0.4%
    Dax 2,900 2,838 -2.1%

    Global markets were largely lackluster including the Indian bourses. Asian market were the largest losers with losses near 2%. As the SARS outbreak spreads Asian countries (especially southeast Asian countries) continue to feel the heat economically as business travel has almost come to a standstill. On the Indian bourses however the result season has caught on with prominent companies like Satyam, Reliance, Cipla and ICICI Bank. While the software and major disappointed, the rest reported earnings more or less in line with expectations, thus failing to boost investor sentiment.

    (Price in US $) 19-Apr-03 26-Apr-03 Change
    Satyam Infoway 4.3 4.5 6.3%
    ICICI Bank 6.0 5.9 -2.5%
    Dr. Reddy's 19.4 19.2 -0.8%
    Wipro 21.6 20.8 -3.9%
    VSNL 3.2 3.1 -2.8%
    MTNL 4.1 3.9 -4.2%
    Infosys 43.6 41.8 -4.1%
    Rediff 3.7 4.1 10.1%
    HDFC Bank 16.0 16.5 2.9%
    Satyam 7.4 8.0 7.5%
    Silverline 1.1 1.2 16.2%

    Indian ADRs were largely in the negative with the exception of Satyam, Sify and HDFC Bank. While Satyam disappointed investors with its results, it managed to gain, as investors were pleased with the company’s efforts to clean up its books by writing off its inefficient subsidiaries. HDC Bank has been buoyant since its results were announced last week. ICICI Bank on the other hand reported results in line with expectations but investors did not seem too pleased with the company’s declaration of a large dividend instead of cleaning up its books. Indian investors however seemed pleased with the stock on the Indian markets. Going forward results are likely to drive market sentiments.



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