Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Economic concerns take toll - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 3, 2002

    Economic concerns take toll

    The US markets ended the week flat, marred by stream of worrying corporate earnings and dismal economy data. Despite the indices being considerably lower, investors are staying away from equities due to mounting fears regarding the prospects of the US economy.

    Early during the week, Qwest Communications joined the list of companies admitting loopholes in their accounting practices. Qwest indicated that it needed to restate its financials, as it improperly booked US$ 1.2 bn in sales previously. Nvidia, a chipmaker, weighed high on the markets as it lowered its revenue forecast for the year due to weakness in the demand for personal computers. Oil companies too disappointed markets. Both Exxon Mobil and Shell posted a sharp decline in profits.

    Economic data released during the week, were also not so impressive. The US GDP growth slowed down to 1.1% in the June quarter from a robust 6.1% rise recorded in the previous quarter. Consumer spending, which fuels two-thirds of national economic activity, grew at a much subdued pace of 1.9%, after increasing at a 3.1% in the March quarter. Orders for US factory goods fell in June at their steepest pace in last seven months. Construction spending also declined to 2.2% in June, well below analysts’ expectations for 0.4% gain. The data pointed to the growth in the US economy tapering, thus scaring investors away from equities.

    Dr. Reddy’s in limelight
    (Price in $) 27-Jul-02 2-Aug-02 Change
    Dr. Reddy's 16.7 19.1 14.2%
    Infosys 49.5 53.4 7.9%
    HDFC Bank 13.9 14.1 1.7%
    MTNL 5.3 5.2 -1.5%
    ICICI Bank 6.0 5.8 -3.0%
    VSNL 5.3 5.1 -4.3%
    Wipro 24.4 22.9 -5.9%
    Silverline 1.3 1.2 -7.7%
    Satyam Infoway 0.5 0.5 -7.7%
    Satyam 9.1 8.1 -11.5%
    Rediff 0.4 0.4 -14.6%

    Indian ADRs were up selectively. Internet stocks were the largest losers. Dr. Reddy’s on the other hand flared up by over 14% on its commendable quarterly performance. Its revenues grew by 51% and profits were up by 176% on a consolidated basis for the quarter. The company also improved its operating margins sharply by 10%.

    ICICI Bank lost ground towards the end of week, shedding all its gains. After the merger with ICICI, the bank reported operating loss of over Rs 1 bn as against profits of Rs 115 m, on a standalone basis for ICICI Bank, in the comparable previous quarter. High borrowings costs of ICICI impacted the bank’s overall performance. However, it aims to repay high cost funds of ICICI amounting to Rs 160 bn in the current year.

    PSU telecom stocks also tumbled on their dismal quarterly performance. MTNL’s earnings fell by 34% on the back of a steep decline in operating margins. MTNL is losing revenues due to a drastic fall in DLD/ILD (domestic long distance) tariffs. VSNL also declared a 29% fall in profits. Lower ILD (international long distance) telephony rates have taken a toll on the company’s revenues and profits.

    US markets still subdued.
    Indices 27-Jul-02 2-Aug-02 Change
    Hang Sang 9,773 9,992 2.2%
    FTSE 4,017 4,076 1.5%
    Nikkei 9,591 9,710 1.2%
    Dow 8,264 8,313 0.6%
    NASDAQ 1,262 1,248 -1.1%
    Dax 3,579 3,532 -1.3%
    BSE 3,024 2,985 -1.3%

    Contrary to the trend witnessed in the US markets, global indices managed to accumulated some gains on a selective basis. Although, stocks have declined to their lowest levels, in the near term corporate business outlook is likely to rule the markets trend.



    Equitymaster requests your view! Post a comment on "Economic concerns take toll". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    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.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    Here's What Driving Gold Prices Up These Days (Outside View)

    Aug 21, 2017

    PersonalFN explains the chief factor pushing gold prices up of late.

    How Unique Are the Companies You Invest In? (The 5 Minute Wrapup)

    Aug 21, 2017

    One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 03:37 PM