Sep 28, 2002|
Wall Street lacking strength
Profit warnings from the US corporate majors and fears of military action against Iraq pushed the US markets down further. News that the Federal Reserve opted to keep interest rates unchanged had little impact on the markets.
The pace of corporate profit warnings is picking up as September draws to a close, with companies across broad economic sectors revealing disappointing outlook for their quarterly results. Wyeth, the drug-maker, warned that current year's profit would miss expectations. Dow index heavyweights, Philip Morris, SBC Communications and General Electric too indicated tough business environment. Delta the No. 3 US airline, forecasted wider than expected third quarter losses. Tech stocks too could not remain immune from losses. Leading investment banker, Goldman Sachs, trimmed its estimates on a number of communication chipmakers, citing weakness in telecom and personal computers demand.
The latest economic data was discouraging. Consumer confidence index dipped to 86.1 in September from 87.6 in the previous month. Stronger exports, on the other hand, led to a modest revision in the US GDP growth to 1.3% in the second quarter from 1.1% estimated earlier.
ICICI Bank in limelight
|(Price in $)
Indian ADRs were up selectively. Silverline and Satyam were the largest losers. The exponential gain in Sify’s stock was due to its reverse stock split, converting 4 ADRs into 1 ADR. Adjusting the company’s stock price for the split, Sify’s ADR is down by over 40% during the week.
ICICI Bank gained on news of selling 16.5% stake to strategic investors like Prudential, Lombard and Singapore government. The bank accumulated capital gains of over Rs 11 bn, which it aims to utilize in cleaning off the balance sheet by making higher provisions for NPAs.
Satyam was down by over 6%. Satyam’s ADR is currently trading at par with its local stock price. Among the latest business development, the company signed an agreement with National Geophysical Research Institute (NGRI) to provide solutions in the field of old and gas exploration.
Dow dips into red
The sentiment in the markets world over is cautious amidst concerns over possible war between Iraq and US. Investors are wary of parking their funds into equities, as corporate business outlook is not exciting enough. Quarterly earnings season will begin in the coming week. With expectations of lacklustre performance from major US corporates, the markets are likely to remain on the sidelines in the near term.
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