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Global Markets: Strong performance

Sep 20, 2003

This week saw the US markets close in the positive, despite remaining volatile throughout. While the Dow was up by about 2%, the NASDAQ gained 3% over the previous weeks closing levels. Monday saw the markets remaining cautious with the Federal Board Policy meeting to decide the direction of the interest rates. This led to the indices opening the week in the red.On Tuesday, however, the markets gained ground on the back of Federal Reserve board indicating that the interest rate would continue to be low in order to boost the economic growth. However, the indications were that the risk of inflation remaining at predominantly lower rates would be a cause of concern in the near future. On Wednesday, the markets witnessed some selling pressure. In absence of any economic news, investors focused towards corporate news. Among corporate news, Altria gained ground after the company won an important legal victory. On the other hand, DuPont indicated some concerns regarding sluggish industrial demand.

Thursday saw markets gaining ground on account of positive news regarding the unemployment numbers that were below the benchmark levels. It should be noted that in the past 2-3 months, the unemployment numbers have shown some signs of improvement. This seems to have raised investor optimism. However one should remain cautious, as there are still no definite signs of improving labor markets, which play a significant role in the US economy. On Friday, profit booking was witnessed in absence of any major economic or corporate news.

(Price in US $)13-Sep-0320-Sep-03Change
Satyam Infoway6.07.117.7%
Rediff5.56.09.8%
Infosys65.469.25.8%
Satyam12.513.15.2%
ICICI Bank9.39.51.8%
Silverline1.11.10.0%
Wipro29.428.9-1.5%
HDFC Bank21.521.0-2.3%
VSNL5.25.1-2.9%
Dr. Reddy's25.324.2-4.4%
MTNL5.44.9-10.1%

Indian ADRs were a mixed bag during the week. Notably, Indian ADRs have gained much ground in the last few months on the back of improving sentiments towards the Indian economic growth. During the week, software ADRs were the top gainers. Rediff and Sify gained about 10% and 18% respectively. While Infosys and Satyam gained about 6% and 5% respectively, Wipro lost 2%. Telecom ADRs were among the top losers with VSNL and MTNL losing 3% and 10% respectively.

Indices13-Sep-0320-Sep-03Change
NASDAQ1,8551,9062.7%
Nikkei10,71310,9382.1%
Dax3,5083,5792.0%
Dow9,4729,6451.8%
Hang Seng10,88410,9680.8%
FTSE4,2384,2570.5%
BSE4,3064,217-2.1%

Barring BSE Sensex (India), markets world over gained ground during the week. Top gainers included the NASDAQ (the US), the Nikkei (Japan) and the Dax (Germany). Asian markets gained ground largely led by the banking stocks. On the Hang Seng index, optimism towards the economic recovery and decline in jobless rate led to gains. In Europe also, hopes of economic recovery in the US led to increased optimism as their economy growth is also linked to that of the US economic growth.

World over the indices have gained ground in the last few months on the hopes of recovery in the global economy, largely led by the US economy. However still there are no clear signs of recovery in the US economy and therefore one should exercise caution on this front.

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