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Global markets: Hopes of recovery

Jul 26, 2003

US indices gained ground during the week. Both the Dow and the NASDAQ closed higher by about 1% each. The week started on a negative note with selling pressure observed mainly in technology stocks. Cautious outlook regarding the remaining year by some of the major companies led to the weakness during the start of the week. However the markets continued to move higher on the next two days. This was on the back of strong results posted by Corporate America. On Tuesday, Texas instruments which announced its quarterly results added to the positive sentiments. Wednesday saw encouraging results announcements from Amazon and helped to further improve sentiments. This apart, positive outlook given by Eastman Kodak also helped indices gain further ground.

On Thursday, weekly unemployment numbers, which saw a drop below the benchmark levels, led to increased optimism, as the numbers indicated signs of improving labour markets. However, markets witnessed selling towards the closing on account of rumours that a plane flew directly over President Bush's motorcade in Philadelphia and that U.S. Secretary of Homeland Security might raise the terror alert. Markets gained further ground on Friday on account of positive economic reports on better durable goods orders and also that from new home sales.

(Price in US $) 19-Jul-03 26-Jul-03 Change
Satyam 9.5 10.5 10.9%
HDFC Bank 21.0 21.8 3.7%
MTNL 4.6 4.7 3.3%
Infosys 54.2 55.0 1.5%
VSNL 5.0 4.9 -2.0%
Rediff 6.9 6.8 -2.7%
ICICI Bank 8.3 8.0 -4.2%
Dr. Reddy's 25.7 24.7 -4.2%
Silverline 1.9 1.8 -4.8%
Wipro 24.5 23.0 -6.1%
Satyam Infoway 7.2 6.4 -10.9%

Indian ADRs were a mixed bag during the week. Satyam was the top gainer. Satyam has reported a sequential topline growth of 4% for the first quarter ended June 2003. Also it witnessed profits during the quarter as compared to losses during the earlier quarter. This increased optimism towards the stock and it gained ground by about 11%. Despite witnessing a 6% dip in the topline, ICICI Bank was able to increase its bottomline by about 35%. This was on account of improvement in the net interest margins and a significant growth in other income. However the stock was down 4% during the week.

Indices 19-Jul-03 26-Jul-03 Change
BSE 3,648 3,726 2.2%
FTSE 4,073 4,131 1.4%
Nikkei 9,528 9,648 1.3%
NASDAQ 1,709 1,731 1.3%
Dow 9,188 9,285 1.0%
Dax 3,367 3,357 -0.3%
Hang Seng 10,141 9,939 -2.0%

Barring weakness seen in the Hang Seng (down 2%) and the Dax (marginally down), markets gained ground world over. In European markets, positive outlook given by major pharmaceutical companies led to increased optimism towards the drugs sector and was reflected in the gains on the indices. Concerns regarding growth in the telecom industry led to weakness in the Hang Seng index and it was down 2% during the week. However Nikkei gained and was up 1% for the week.

Till now most of the major US corporates have announced their quarterly results. However next week may witness further volatility on the indices on account of major companies like Exxon Mobil, P&G, DuPont and Walt Disney announcing their quarterly results. It should be noted that positive economic reports which came during the week will further help the sentiments to remain buoyant as investors see some signs of economic recovery during the second half of the current year.

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