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Grim sentiment clouds Wall Street

Sep 7, 2002

The US markets continued its lower journey in the current week. Mixed news from economy and fears of a revival in corporate profits hit the markets sentiment. US attacks on Iraq also spread nervousness in the markets. The week started on a dour note, as the index of factory business condition remained unchanged in August at 50.5. New orders, a key source of future growth, fell for the first time since last November. Growth in the US service sector, which forms about 80% of the economy also eased for a third straight month in August. Positive news from auto sector and lower unemployment rate however, trimmed market losses. US auto sales surged to its highest level in August 2002, up by 13%. Interest free loans and hefty cash rebates offered by auto majors to buy new vehicles, fueled volume growth. Unemployment rate also declined to 5.7% in August, lowest in last five months.

Corporate earnings forecast were mixed. Intel lowered its third quarter revenue projections. It was however better than market expectations. On the other hand, General Motors, the world's largest automaker, raised both its earnings targets and production forecasts. Consumer products maker, Procter & Gamble, too raised its earnings expectations for the fourth straight quarter.

Rediff on a roll
(Price in $) 31-Aug-02 7-Sep-02 Change
Rediff 0.4 0.4 14.3%
HDFC Bank 14.5 14.7 1.7%
Infosys 56.6 57.4 1.4%
Silverline 1.0 1.0 1.1%
Wipro 26.1 26.0 -0.4%
Satyam 10.4 10.3 -0.6%
Dr. Reddy's 17.9 17.8 -0.7%
ICICI Bank 6.6 6.2 -6.8%
MTNL 5.3 4.9 -7.6%
Satyam Infoway 0.6 0.6 -7.9%
VSNL 5.3 4.9 -8.3%

Indian ADRs were up selectively. Rediff was in limelight. The stock witnessed volatile movements during the week. Telecom ADRs, VSNL and MTNL were the largest losers. Sify too declined sharply.

Satyam was holding ground after the company announced to enter into an alliance with the US based company, Evolutionary Technologies International. Both companies together would provide end-to-end solutions to Fortune 500 companies.

Wipro was down marginally. The company entered into an agreement to acquire the entire equity holding owned by American Express Travel Related Services Co. in Spectramind services for Rs 170 m. On completion of the transaction, Wipro's aggregate holding in Spectramind eServices will be approximately 92%. Wipro also announced the launch of a development centre at Canada. The new centre is capable of accommodating 200 software professionals.

Weakness prevails
Indices 31-Aug-02 7-Sep-02 Change
BSE 3,181 3,141 -1.3%
NASDAQ 1,315 1,295 -1.5%
Dow 8,664 8,427 -2.7%
FTSE 4,227 4,107 -2.8%
Hang Seng 10,044 9,721 -3.2%
Nikkei 9,619 9,129 -5.1%
Dax 3,713 3,486 -6.1%

Global markets are showing no signs of upward movement. Most of the key indices recorded losses for the second consecutive week. Continuous negative inflow of news from tech companies is likely to curtail the upward correction in the markets in the coming week.

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