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Global markets: A splash of red - Views on News from Equitymaster
 
 
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  • Nov 22, 2003

    Global markets: A splash of red

    The US markets that were already showing some signs of weakness over the past two weeks on account of consolidation, got further jittery due to the terrorist attacks, which led to second straight week of declines. For the week ending November 21st, the Nasdaq edged lower by nearly 2% whereas the Dow shed 1.4%.

    The spate of terrorist attacks last weekend, led to the markets starting off on a weak note on Monday. The selling pressure continued on Tuesday with the dollar's depreciation against the Euro as well as the Yen, further adding to the grim mood. However, strong performance from Dow member Hewlett Packard on Wednesday and a report that showed surge in housing starts and building permits gave investors some reasons to cheer and this resulted in both the indices ending their four day losing streak and closing in the positive. The indices declined further on Thursday but not before displaying volatility, on account of a number of news, both positive as well as negative. A sedate Friday that saw tech gains for Nasdaq but nothing substantial for the broader market rounded off the day and subsequently the week that saw the indices slipping for the second time in as many weeks.

    Indices 14-Nov-03 21-Nov-03 Change
    NASDAQ 1,930 1,894 -1.9%
    Hang Seng 12,204 11,840 -3.0%
    Nikkei 10,167 9,853 -3.1%
    BSE* 4,912 4,839 -1.5%
    FTSE 4,397 4,319 -1.8%
    Dow 9,769 9,629 -1.4%
    Dow 3,797 3,642 -4.1%

    Note: BSE closing as on November 15, 2003

    Concerns over global security fears also took its toll on major indices across the world, as all of them (the one's we have listed) closed in the negative. The terrorist attacks in Turkey coupled with the tension in Iraq so dominated the minds of the investors that encouraging reports about the global economic recovery and other positive corporate news got ignored as investors decided to stay away from the stock markets. However, experts believe that the current tension will not be able to disturb the global economic recovery and the investors will flock back as they start to live with the geopolitical uncertainty. Also, with the global growth engine, the US, still showing positive signs from the employment market as well as the consumer side, the good times are here to stay and the current decline seems to be just an aberration.

    (Price in US$) 14-Nov-03 21-Nov-03 Change
    HDFC Bank 24.3 24.5 0.8%
    Wipro 36.2 36.4 0.6%
    Satyam 19.7 19.4 -1.5%
    Infosys 83.0 78.1 -5.9%
    Satyam Infoway 5.0 4.3 -14.0%
    Dr Reddy's 27.7 26.8 -3.2%
    Silverline 1.1 1.1 0.0%
    ICICI Bank 12.8 12.7 -0.8%
    Rediff 6.0 5.1 -15.0%
    MTNL 5.2 5.0 -3.8%
    VSNL 6.2 5.8 -6.5%

    As far as the performance of Indian ADRs over the week is concerned, barring HDFC Bank and Wipro, both of whom closed 1% higher, all the other ADRs ended the week suffering declines. Dotcom stocks such as Satyam Infoway and Rediff were the worst hit, losing 14% and 15% respectively over the past week. Software majors such as Infosys and Satyam, lost ground for the second straight week, shedding 6% and 2% respectively, which is opposite to what was seen on the Indian bourses where they closed the week with gains. Wipro ADR, however, bucked the trend, gaining almost 1%. Banking ADRs showed mixed trends in a week that saw the release of banking sector report by RBI, which pointed towards improvement in the fundamentals of the banks. Telecom stocks also traded weak and ended the week on a weak note.

     

     

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