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Global markets: Tech ache for Nasdaq

Dec 6, 2003

After making the Dow touch new 18-month highs on Thursday, the US markets, especially Nasdaq, skidded on Friday and this left the indices at the opposite ends of the stock market barometer. Thus, for the week ending December 5, while the Nasdaq lost 1.1%, Dow gained by the same margin. Strong manufacturing sector report and expectations of strong growth ahead of the holiday season infused new optimism among the investors. As a result, the US indices started the week as well as the month of December with a bang. In the process, while the Nasdaq carved out a new 22-month high, the Dow closed at a new 18-month high. However, investors decided to pause the buying activity over the next two days and a mild bout of profit booking was witnessed, which resulted in two successive days of decline for Nasdaq. The Dow on the other hand managed gains on Wednesday. The cold reaction continued on Thursday as well but a last hour buying spurt saw the indices ending the day with gains and also resulted in Dow touching a new 18-month high.

However, investors who were waiting for an excuse to take some money off the table, got it delivered on a platter on Friday when tech major, Intel, announced a rather okayish mid-quarter update and the less-bullish-than-hoped-for economy employment report. As a result, the markets suffered declines on Friday and while this was enough to wipe out Nasdaq's gains at the start of the week, Dow still managed to end the week on the positive side.

Indices 28-Nov-03 5-Dec-03 Change
NASDAQ 1,960 1,938 -1.1%
Hang Seng 12,317 12,315 0.0%
Nikkei 10,101 10,373 2.7%
BSE-SENSEX 5,048 5,130 1.6%
FTSE 4343 4367 0.6%
Dow 9,782 9,863 0.8%
Dax 3,746 3,842 2.6%

As far as major indices across the world were concerned, the European indices gained during the first few days of the week mainly on the back of good reports from the US markets. The weakening dollar failed to unnerve investors, as they were hopeful that restructuring by corporate Europe would more than compensate for it, thus resulting in improved earnings. However, the indices tanked on Friday, following Intel's subdued revenue forecast and weak US jobs numbers. But the declines were not able to wipe out the early week gains and as a result both the Dax and FTSE ended the week with gains. Similar story was scripted on the Asian indices as well with markets gaining during the first few days and then giving up some of the gains on Friday.

(Price in US$) 28-Nov-03 5-Dec-03 Change
HDFC bank 26.2 26.4 0.8%
Wipro 38.7 39.3 1.6%
Satyam 21.0 21.6 2.9%
Infosys 83.1 81.1 -2.4%
Satyam Infoway 5.3 5.0 -5.7%
Dr.Reddy's 28 28.4 1.4%
Silverline 1.1 1.1 0.0%
ICICI Bank 13.3 14.3 7.5%
Rediff 5.7 5.3 -7.0%
MTNL 5.4 5.4 0.0%
VSNL 6.0 6.1 1.7%

Indian ADRs had a good December first week as barring the dotcom stocks such as Rediff and Satyam Infoway and tech major Infosys, all of them managed to close in the positive. The top honours went to banking ADR, ICICI Bank, as it gained nearly 8% over the week, buoyed by expectations of consolidation in the Indian private banking sector following HSBC's acquisition of a 14.7% stake in UTI, one of India's largest private sector bank. HDFC Bank also registered gains of nearly 1%. Among the tech stocks, while Infosys suffered a decline of 4%, Satyam and Wipro gained 3% and 2% respectively. Pharma major Dr Reddy's (1%) and ILD major VSNL (2%) were among the other major gainers on the US bourses.

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