Aug 14, 2004|
Global markets: Tech ache for Nasdaq
It was yet another turbulent week on the US bourses with both the Nasdaq and Dow hitting new multi-month lows. At the end of it, while the tech laden Nasdaq edged lower by 1%, Dow ended almost unchanged.
While the markets are already under strain following record high crude prices, lower than expected results as well as grim forecasts from some Nasdaq heavyweights didn’t help matters. The first to get off the block was Cisco. Although the company did post respectable results, its forecast was not exactly encouraging. Cisco was followed by National Semiconductor, which also reiterated slowdown fears in the forthcoming quarters. The weakness among tech stocks however did help Dow as rotation into blue chips helped the index post marginal gains. The most important event of the week was however the Fed policy meeting, which hiked the interest rate by another quarter of a percentage point. While this was largely along expected lines, the announcement that the economy seems to be in an expansionary mode provided some reprieve to the markets. At the fag end of the week, Dell, another Nasdaq component announced robust results and this helped the broader tech sector post gains. However it was not enough to temper the impact of the sell off earlier in the week.
European as well as major Asian indices also went the American way and ended at levels not seen in months. While corporate earnings in the European continent have not disappointed, whatever gains the European economy managed to achieve was largely due to strong exports and that now seemed to have come under risk. Macro issues such as rising interest rates, climbing oil prices, high levels of debt and the risk of the Chinese economy overheating seem to be weighing heavily on the stock markets. Weakness on Wall Street and surging crude prices also affected Asian indices. Nikkei on the other hand also had to contend with weakness in the Japanese economy, which grew at a slower rate than expected during the June quarter.
|(Price in US$)
It was yet another bad week for the Indian ADRs as barring HDFC Bank, none of them could manage gains. Worst hit were the dotcom majors Rediff and Sify and also pharma major Dr Reddy’s. The company’s concentration on Para IV filings has brought down the sales, as it has not got any positive approvals in last two and a half years on that front. Also, increasing competition in generics has brought down the realizations, which has lowered growth in the revenues. This has lead to the weakness in the ADR for quite some time now. Weakness among tech stocks on Nasdaq did leave its scar on Indian tech ADRs as all of them suffered significant decline during the week.
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