Jun 29, 2002|
US markets lacking confidence
The US markets witnessed volatility this week, as corporate America shook investors confidence. During the week, both the key indices, NASDAQ and Dow touched the levels unseen after the September 11 attacks. Upbeat data on the US GDP growth failed to cheer markets.
The week started with a disappointing quarterly performance from 3Com and Palm. DuPont on the other hand, raised its second quarter earnings estimate, citing higher sales across its different business units. Motorola too reaffirmed its operating earnings forecast for the second quarter and full year. However, the company indicated to cut 7,000 more jobs and to take charges of about US$ 3.5 bn.
The world markets were rocked mid-week after WorldCom, the second largest long distance service provider in the US, admitted that it overstated results by US$ 3.8 bn. Xerox joined the list, by declaring that it restated five years of results to reclassify more than US$ 6 bn in revenues. Accounting scandals poured on the US markets, which were already lacking confidence.
Meanwhile, the US economy showed some signs of strength. The US GDP grew at a revised rate of 6.1% in the first quarter of 2002, boosted by an increase in business spending for equipment and computer software. Consumer spending, which fuels two third of the US GDP, also grew at healthy rate of 3.3%. Jobless claims fell for the fourth straight week by 10,000 to 388,000. On the other hand, the consumer confidence index posted its largest monthly drop in June, after Sept. 11 attacks due to weak jobs market, falling stock markets and inaccuracies in corporate accounting. The index fell to 106.4 in June from 110.3 in May.
Internet ADRs loses sheen
|(Price in $)
Indian ADRs gained selective buying interest. ICICI Bank flared up by over 6% during the week and Internet ADRs recorded sharp losses. VSNL crashed by over 10% on concerns about amount owed by WorldCom, which is expected to be around Rs 5 bn. Tech ADRs managed to recover some of their losses during the last two days of the week.
Infosys announced an alliance with US based, Concours group, a consulting firm. Both the companies together will pool their expertise and resources to help Global 1000 companies define, design and implement large scale change programs intended to yield significant business impact through technology. Infy’s ADR was however, lost 4% over a week.
Wipro was down marginally. The company announced to open a design center for embed solutions at Kiel in Germany. This center is to service customers in Germany and in northern Europe. Wipro is looking towards acquiring firms in the US, Europe and India in the range of US$ 5 m to US$ 200 m. Wipro has cash reserves of US$ 328 m, which would support its acquisition plans.
Global markets firms up
June was a rough month for the US markets, affecting investor confidence due to concerns of corporate insider trading and accounting blunders, which shocked the markets globally. Warnings of potential terror attacks on July 4, Independence Day, could keep investors away from the markets in the coming week.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Aug 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 4, 2017
The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407