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Tech worries US markets - Views on News from Equitymaster
 
 
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  • Aug 31, 2002

    Tech worries US markets

    The US markets wrapped up the week on a sour note, breaking a five-week winning streak on gloomy forecasts from corporate America and downbeat comments from Wall Street analysts. While the NASDAQ tanked by 5%, the Dow was down by over 2%.

    The week started with a dull outlook from Intel. The No. 1 chipmaker indicated modest growth in third quarter earnings over the preceding quarter. The telecom major, Nortel too lowered its third quarter revenue target on softening demand and indicated to cut further 7,000 jobs. Hewlett Packard reported US$ 2 bn quarterly losses after its merger with Compaq. The week ended with a grim forecast from tech bellwether Sun Microsystems. The company cut its earnings forecast for the current quarter and stated that it foresaw tech spending to continue going downhill. A broad downgrade of the semi conductor sector by a leading brokerage house also tempered the tech sentiment.

    Economic data released during the week showed better picture. Consumer sentiment index declined marginally and manufacturing activity expanded for the seventh straight month in August. Consumer durable goods and new homes sales also rose at a strong pace in July.

    Satyam on a roll
    (Price in $) 24-Aug-02 31-Aug-02 Change
    Satyam 9.6 10.4 8.70%
    ICICI Bank 6.2 6.6 7.30%
    Wipro 25.4 26.1 2.80%
    HDFC Bank 14.2 14.5 2.00%
    Dr. Reddy's 17.7 17.9 1.40%
    VSNL 5.3 5.3 1.10%
    Silverline 0.9 1 1.10%
    Infosys 56.1 56.6 0.90%
    MTNL 5.3 5.3 0.00%
    Rediff 0.4 0.4 -7.90%
    Satyam Infoway 0.7 0.6 -11.30%

    Indian ADRs in general, save of Internet stocks, Sify and Rediff, ended the week on a positive note. Satyam and ICICI Bank were the key gainers. Satyam was in limelight in expectations that the company would receive sizable order. ICICI Bank too showed the strength on upbeat outlook for the bank from several broking houses.

    Wipro was up by 3% on its announcement of having entered into a contract with CNA Life, business unit of the CNA insurance companies, to develop a new business processing system and transform CNA Life's existing legacy policy administration system. The new business system, developed by Wipro Technologies, is expected to go live in October 2002. Infy, meanwhile, was up marginally, as the company did not make any major announcement in its analyst meet. The company indicated pricing pressure from the new clients.

    BSE outperforms
    Indices 24-Aug-02 31-Aug-02 Change
    BSE 3,119 3,181 2.00%
    Hang Seng 10,246 10,044 -2.00%
    Dow 8,873 8,664 -2.40%
    Nikkei 9,867 9,619 -2.50%
    Dax 3,828 3,713 -3.00%
    FTSE 4,390 4,227 -3.70%
    NASDAQ 1,381 1,315 -4.80%

    Markets globally fell sharply for the week, NASDAQ being the major loser. Continuous negative inflow of news from tech companies is likely to curtail the upward correction in the US markets in the coming week.

     

     

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