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Global markets: Asia does a US, Europe does not - Views on News from Equitymaster
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  • Nov 15, 2003

    Global markets: Asia does a US, Europe does not

    With the flow of market-moving reports slowing down to a trickle and a feeling that most of the valuations have been factored in the short-term, the US markets went on a consolidation spree and dragged the indices down but not before making them touch new highs once on Wednesday. For the week ending November 14, while the Nasdaq lost 2%, the Dow edged lower marginally.

    The earnings vacuum, in conjunction with a period of no new economic reports to be released early in the week, gave the investors the opportunity to book profits and as a result, the markets witnessed weakness both on Monday as well as Tuesday. However, the losing streak finally ended on Wednesday when the indices carved out new multi-month highs mainly on the back of rally in tech stocks, ahead of PC maker Dell's earnings report. The euphoria proved to be short lived as the markets drifted lower again on Thursday owing to the retailing giant Wal- Mart's lackluster outlook for the US economy. The fall, however, remained marginal as markets recovered to an extent on the news of Dell's performance that was along expected lines. Sell-off in tech stocks took its toll on Friday again and despite the news of a rise in consumer sentiment index, the indices edged further lower on Friday, thus capping off a week that saw a wave of consolidation gripping the investors in the US markets.

    Indices 7-Nov-03 14-Nov-03 Change
    NASDAQ 1971 1930 -2.1%
    Hang Seng 12215 12204 -0.1%
    Nikkei 10629 10167 -4.3%
    BSE 4968 4861 -2.2%
    FTSE 4377 4397 0.5%
    Dow 9810 9769 -0.4%
    Dax 3783 3797 0.4%

    The indices in the other major economies of the world remained a mixed bag. While the Asian indices reflected the somber mood prevailing in the US markets, the major European indices such as FTSE and Dax continued to witness strength on the back of improved third quarter results and expectations that the entire Euro zone economy will pick up more steam over the next six months. As far as the losers are concerned, Japanese benchmark index, the Nikkei 225, emerged as the major loser, the decline being fueled by a strengthening yen that is denting Japan's exports prospects. Selling pressure was also witnessed on the Indian stock markets as the investors decided to book profits after the strong rally witnessed in recent times.

    (Price in US$) 7-Nov-03 14-Nov-03 Change
    HDFC bank 23.3 24.3 4.3%
    Wipro 38.1 36.2 -5.0%
    Mahindra Satyam 19.7 19.7 0.0%
    Infosys 87 83 -4.6%
    Satyam Infoway 5.9 5.0 -15.3%
    Dr.Reddy's 27.9 27.7 -0.7%
    Silverline 1.1 1.1 0.0%
    ICICI Bank 12.8 12.8 0.0%
    Rediff 6.2 6.0 -3.2%
    MTNL 5.2 5.2 0.0%
    VSNL 5.7 6.2 8.8%

    With the exception of HDFC bank and ILD (International Long Distance) major VSNL, the Indian ADRs ended the week either flat or with declines. ILD major VSNL led the small list of gainers with a gain of around 9% mainly on the back of news that the company has signed a new contract worth around US$ 125 m for an under water cable project. The management of the company, however, has so far refused to comment on the issue. Tech bellwethers experienced a bout of profit booking, as barring Satyam that remained flat, all of them closed in the negative. Dotcom stocks also suffered declines with Satyam Infoway witnessing the maximum decline of around 15%.



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