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Global markets: India tops again

Jun 21, 2003

US markets managed to close the week higher with both the Dow and the NASDAQ gaining 1% each. A strong Monday open set the tone for the week, taking the indices to their 2003 highs. The rally seen was on the back of better than expected reports on manufacturing sector for the New York State. This strengthened the hopes of a US economic recovery.The next two days saw further gains on indices. Better than expected reports on housing, marginal increase in industrial production and a flat consumer price index, helped strengthen investor sentiment. The flat consumer price index (after falling in April) eased the deflationary concerns to some extent. On Wednesday, buying in technology stocks helped the indices gain further (Oracle had increased its bid price for PeopleSoft). However, the Dow saw some weakness and closed in the red on Wednesday.

On Thursday, profit booking crept in. Caution regarding GE's plastic business encouraged profit taking on the indices. Weekly unemployment numbers, which were better than expected, failed to boost sentiment. On Friday, profit booking continued on the NASDAQ while the Dow closed higher on account of index heavyweight General Motors' positive outlook indicating strengthening auto sales in 2003. Next week will see a further slew of economic reports, which may define the market direction going forward.

Indices14-Jun-0321-Jun-03Change
BSE 3,354 3,500 4.3%
Dax 3,169 3,239 2.2%
Nikkei 8,981 9,120 1.6%
NASDAQ 1,626 1,645 1.1%
Dow 9,117 9,201 0.9%
Hang Seng 9,856 9,930 0.8%
FTSE 4,134 4,160 0.6%

Globally, markets closed higher for the week. Among them, Indian markets topped the charts posting over 4% gains. Rally in Indian markets was led primarily by index heavyweights. Positive news regarding US economic reports led to the gains even in Asian and European markets. For Europe, exports account for about 20% of their GDP and hence positive news in US economic front helped these markets gain strength. Even Asian markets gained strength on the hopes of increased exports.

(Price in US $)14-Jun-0321-Jun-03Change
Rediff3.45.150.1%
Satyam Infoway4.55.523.5%
Wipro20.123.316.0%
VSNL4.65.110.2%
Satyam8.89.710.1%
Dr. Reddy's21.722.32.8%
HDFC Bank18.619.02.2%
ICICI Bank7.07.00.6%
Silverline1.91.8-4.7%
Infosys51.149.9-2.3%
MTNL4.34.3-0.7%

Indian ADRs, which were weak last week, bounced back this week. Rediff (50%) and Sify (24%), which were hammered last week, gained sharply and were among the top gainers. Technology ADRs too gained during the week. Satyam won a long-term contract with World Bank amidst stiff global competition. This led the stock to gain about 10%. Even Wipro gained strength and was up 16%. VSNL also gained significantly during the week (up 10%).

As mentioned earlier, the coming week will see a slew of economic reports and this will set the mood of investors. This apart, the policy setting meeting of Federal Reserve to decide interest rates direction will be of more interest and will play a major role in driving investor sentiment. Moreover, the outlook regarding corporate America's quarterly performance will also play a part in the indices fortunes. Back in India, FIIs confidence in the Indian markets is strengthening further. This is indicated by the fact that the total FII investments (Rs 51.8 bn) so far during 2003 have already surpassed their investments (Rs 36.7 bn) in 2002.


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