Jul 6, 2002|
US markets waiting for trigger
It was a roller coaster ride for the US markets this week. After having dropped by over 7% in the first three days of trading, the NASDAQ made a strong come back on the last trading day of the week. No terror attacks on the 4th July holiday removed the markets fears and sparked rally.
Accounting inaccuracies ruled the sentiment of markets this week. Starting with WorldCom, this time Xerox, Vivendi Universal and Global Crossing admitted error in accounts, which is likely to affect their past and future earnings. Quarterly earnings reports were mixed. Diversified manufacturer 3M indicated higher second quarter earnings due to improved sales. Chipmaker AMD (Advanced Micro Devices) reduced its quarterly sales forecast. Continuing weakness in the personal computer market and competition from its archrival Intel forced the company to cut its revenue target.
The US economic data too failed to cheer investors. Sluggish job markets contributed to a rise in unemployment rate to 5.9% in June from 5.8% in the previous month. Non-manufacturing index declined to 57.2 from 60.1 in May, indicating a slowdown in service sector.
Infy in limelight
|(Price in $)
Indian ADRs gained selective buying interest. Silverline and Infosys were in demand, while Wipro lost steam. Internet ADRs too dropped sharply. Banking stocks managed to accumulate some points.
Infosys was up by nearly 5%. The RBI has approved 100% FDI in company. However, investment by single foreign fund has been restricted to 10%. The company is expected to declare its first quarter results in the coming week. Infy’s first quarter revenues are projected to rise by 12% and earnings by 8%, YoY. Its operating margins are expected to remain flat.
Dr. Reddy’s announced US FDA approval for its 2mg and 4 mg Tizanidine Hydrochloride tablets. The drug is the generic equivalent of Elan Corp.’s Zanaflex and is used for the management of increased muscle tone. The product had annual US brand sales of US$ 160 m in 2001. Dr. Reddy’s aims to market this drug through its alliance partner Pan Pharmaceuticals. Dr. Reddy’s ADR is trading at a discount of 2% compared to its domestic stock price.
Banking stocks also ended the week positively. ICICI Bank was up by 3%. The bank acquired two branches of Standard Chartered Grindlays Bank located in Shimla and Darjeeling. The acquisition has given ICICI Bank access to 7,500 customers of these branches and has increased its distribution network to 409 branches. HDFC Bank too bounced back sharply from lower levels.
BSE leads the pack
July started on a positive note for the markets world over. Industry stalwarts like, Yahoo and Juniper Networks are expected to report their quarterly performance in the coming week, which will determine the trend in US markets.
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