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Global markets: Strong week... - Views on News from Equitymaster
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  • Jun 12, 2004

    Global markets: Strong week...

    The US indices managed gains over the week and while the tech laden Nasdaq edged higher by 1%, Dow came in a little higher with a near 2% gain for the week, which was shortened on account of national day holiday on Friday in order to mourn the demise of former US president Ronald Reagan.

    Broad based gains were witnessed at the start of the week with both the benchmark indices rallying on account of an extended euphoria over last Friday's strong payrolls report. OPEC announcement of boosting output and government's assurance that oil inventories were strong enough also did their bit to infuse some positive sentiments among investors. On Tuesday, Alan Greenspan, the Fed chairman hinted at earlier than anticipated interest rate hikes and this spooked the investors and led to weakness in the markets early on. However, a significant drop in crude oil prices helped save the blushes and resulted into Dow ending the day with marginal gains while Nasdaq remained largely unchanged.

    In these periods of high volatility, gains for three days in a row is reason enough for anyone to book profits and take some money off the table. This is what exactly happened on Wednesday, when taking advantage of the multi-week highs, investors exited from stocks of some key sectors, especially the tech and led indices to edge significantly lower for the day. With the markets to remain closed on Friday, trading remained light on Thursday but the indices still managed to earn gains, thanks largely to an end of the session buying activity. Also, strong gains witnessed on the first two trading days of the week were enough to push the indices higher for the week.

    Indices 04-Jun 11-Jun Change
    NASDAQ 1,979 2,000 1.1%
    Hang Seng 12,023 12,396 3.1%
    Nikkei 11,128 11,527 3.6%
    BSE 4,889 4,833 -1.1%
    FTSE 4,454 4,484 0.7%
    Dow 10,243 10,410 1.6%
    Dax 3,962 4,014 1.3%

    Barring Indian benchmark BSE, all the other major indices across the globe managed to post gains for the week. Despite a sell-off at the fag end of the week over inflation related worries, European indices viz. the FTSE and Dax gained for fourth week in a row. With stocks trading at the higher end of the valuations spectrum and strong possibility of interest rate hike across Europe it remains to be seen how long the party is going to last for these indices. Similar story was scripted among the Asian markets, with stocks ending lower on the last trading day but managing gains for the week.

    (Price in US$) 04-Jun 11-Jun Change
    Dr.Reddy's 19.0 18.9 -0.5%
    HDFC Bank 27.5 29.5 7.3%
    ICICI Bank 13.2 13.1 -0.8%
    Infosys 81.8 84.5 3.3%
    MTNL 6.3 6.8 7.9%
    Rediff 8.7 8.6 -1.1%
    Satyam 19.2 18.3 -4.7%
    Satyam Infoway 6.8 6.7 -1.5%
    VSNL 6.4 6.7 4.7%
    Wipro 42.8 44.3 3.5%

    Telecom and tech ADRs continued to remain in the good books of US investors as these companies witnessed another week of strong gains. With gains of nearly 8%, MTNL, the fixed line major emerged as the highest gainer among Indian ADRs. The advent of private players in the cities of Delhi and Mumbai, where the telecom major provides its services had put a question mark over the company's growth prospects. However, a possibility of its merger with BSNL, country' s largest fixed line services provider and the management' intent towards targeting newer growth avenues seems to have rekindled investor interest towards the stock. Besides tech and telecom ADRs, private banking major HDFC Bank was the only other gainer among Indian ADRs on the US bourses.



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