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Global markets: Uncertainty continues - Views on News from Equitymaster
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  • Dec 28, 2002

    Global markets: Uncertainty continues

    US markets have ended the week on a weak and uncertain note. For the whole week the Dow has fallen by over 2% while the NASDAQ has fallen by over 1%. Weakness was observed on almost all the blue chip counters indicating investor reluctance to invest irrespective of the sector. Investors seem to be opting for safer options like gold and bonds due to the heightened concerns over a possible war with Iraq. North Korean defiance is adding to the uncertainty. US markets may continue to remain weak in the beginning of the year due increased geopolitical concerns.

    On the economic front to the picture is bleak. Retail sales during the holiday period disappointed. While the unemployment statistics have shown improvement they failed to lift investor sentiment. US Inc.’s performance for 2002 is also expected to be poor indicating a slower than expected economic recovery. The prospects for 2003 as indicated by company managements do not inspire confidence.

    Indices 21-Dec-02 28-Dec-02 Change
    FTSE 3,890 3,829 -1.6%
    Nikkei 8,407 8,714 3.7%
    BSE 3,337 3,398 1.8%
    Hang Seng 9,629 9,445 -1.9%
    NASDAQ 1,363 1,348 -1.1%
    Dow 8,511 8,304 -2.4%
    Dax 3,024 2,840 -6.1%

    Global markets with the exception of the BSE Sensex and the Nikkei remained lacklustre for the second consecutive week. The Sensex was mainly buoyed by the much-anticipated Reliance Infocomm launch. Strong gains were also seen in the old economy sectors like auto and cement. Though the sentiments on the domestic bourses look bullish continuous deferring over the disinvestment issue and the Iraq crisis may keep the markets range bound in the coming weeks. Global markets on the other hand are expected to reflect the nervous sentiments on the US markets and may remain volatile.

    (Price in US $) 21-Dec-02 28-Dec-02 Change
    Satyam Infoway 2.5 2.7 6.8%
    ICICI Bank 6.7 6.6 -2.1%
    Dr. Reddy's 18.8 19.1 1.5%
    Wipro 33.2 34.0 2.3%
    VSNL 4.3 4.2 -2.3%
    MTNL 4.4 4.4 0.0%
    Infosys 74.1 71.4 -3.7%
    Rediff 0.6 0.9 46.9%
    HDFC Bank 13.8 13.4 -2.5%
    Satyam 13.1 13.2 0.4%
    Silverline 1.0 0.9 -7.1%

    Indian ADRs mirroring the US markets exhibited weakness yesterday. Profit booking set in on software counters at the end of the week. For the week Wipro and Dr Reddy’s were the only major gainers. Performance of Indian ADRs remained volatile during the week reflecting the nervous sentiment on US markets. Lack of news flow meant that Indian ADRs looked for direction from the US markets. Software counters especially have been volatile. Reliance Infocomm’s limited mobility launch increased investor concerns on the fate of the existing operators like MTNL and VSNL. Further volatility may be observed during the coming weeks as the US markets address-growing fears over the possible war against Iraq.



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