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Global markets: Technology led gains

Jul 12, 2003

US indices continued their rally for the fourth consecutive month. While the NASDAQ closed the week higher by 4%, the Dow gained about 1% during the week. The gains on the NASDAQ were primarily garnered during the start of the week due to significant buying witnessed in technology stocks. The news about Microsoft, which is sitting on a huge pile of cash of about US$ 46 bn, considering to give about US$ 10 bn as special dividend, increased optimism towards technology stocks.Markets gained ground on the following couple of days also. News of consolidation in different sectors seemed to have boosted investor sentiments. While data storage maker, EMC announced that it would buy business software developer Legato Systems, Truck manufacturer, Yellow, also evinced interest to buy its rival, Roadway. This led to increased optimism. Alcoa, the aluminium major marked the beginning of second quarter results announcement, which were in line with expectations. However, Dow witnessed profit booking on Wednesday on account of weakness seen in heavyweight, Altria.

On Thursday, the markets were in the red. Yahoo announced its second quarter results towards the closing on Wednesday. Though it posted good results, markets seem to have had factored it earlier. This apart, weekly unemployment numbers released during the week were once again much higher than their benchmark levels. This led to the weakness seen on the US bourses. On Friday, GE announced its quarterly results. The lower earnings declared by the company was in line with market expectations. This apart, hopes of better results from Intel, Home Depot, etc. increased optimism and markets closed on a higher note on Friday. Next week will witness further quarterly results from heavyweights, which will rule sentiments going forward.

Indices28-Jun-035-Jul-03Change
NASDAQ 1,663 1,734 4.2%
Hang Seng 9,637 9,912 2.9%
Dax 3,240 3,327 2.7%
BSE 3,622 3,676 1.5%
FTSE 4,022 4,058 0.9%
Nikkei 9,548 9,635 0.9%
Dow 9,070 9,120 0.5%

World over the markets closed on an optimistic note. NASDAQ (4%) was, however, the top gainer. Among the other major gainers were Hang Seng (3%) and the Dax (3%). Buying witnessed in technology stocks led to the gains on European indices. While Phillips narrowed its second quarter losses on the back of increased demand, Nokia also gained ground and this helped the European indices gain ground during the week. In case of Asian Indices, positive reports from the Japanese government on machinery orders and consumer sentiments fueled optimism about the recovery of its economy and this led to the gains on its indices.

(Price in US $)28-Jun-035-Jul-03Change
Silverline1.72.336.1%
Rediff6.98.626.0%
Satyam Infoway7.38.619.2%
Wipro23.427.517.7%
Infosys53.160.213.3%
Satyam9.710.810.8%
VSNL5.66.19.7%
HDFC Bank20.522.49.3%
Dr. Reddy's25.327.69.2%
ICICI Bank7.87.6-2.3%
MTNL5.24.9-5.0%

Barring MTNL (5%) and ICICI Bank (2%), Indian ADRs gained ground during the week. Top gainers included Rediff (26%), Sify (19%) and Silverline Technologies (36%). Technology stocks witnessed increased optimism during the week. Infosys, the software major, announced its 1QFY04 results during the week. Apart from beating street expectations, the company has revised its FY04 guidance upward and this increased optimism towards the Indian technology sector. Telecom major, VSNL, also gained ground during the week. The government has indicated that it would divest its residual holding in VSNL and this further fueled optimism towards the stock.

World over, the markets gained ground during the week. Increased optimism towards the technology stocks across the globe, led to the gains on the indices this week. Going forward, since it is the earnings season in the US, sentiments in the month of July will primarily be governed by the results being announced by industry stalwarts. Next week will see index heavyweights like Intel, Microsoft, General Motors, Coca-Cola and Citigroup announce quarterly results, which will drive the sentiments going forward, as investors get a clue as to where the US economy is headed.

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