• MAY 17, 2003

Global markets: India tops the charts

US markets continued their upward movement this week. Both the NASDAQ and the Dow managed to gain about 1%. The week started on a positive note for both the Dow and the NASDAQ as they touched new highs for 2003. Primarily the encouraging outlook given by Cisco and Sun Microsystems perked up investor sentiments on Monday.

However, the markets saw profit booking in the next two trading sessions. News of terrorist bombings in the capital of Saudi Arabia added to the weakness. Poor quarterly results posted by the world's largest manufacturer of semiconductor equipment, Applied Materials, and also the weak retail sales guidance given by Wal-Mart for the next quarter led to further declines. On the economy front, the commerce department reported a negative growth in the retail sales for the month of April.

US markets however gained on the Thursday owing to positive news from Computer Associates. The company managed to reduce its losses in the last quarter and also gave a positive outlook going forward. This along with the IBM chief's statement about the stability in technology spending in the current year added fuel to technology stocks and led the gains. However, concerns on the deflationary situation facing America led the decline on Friday. Both the consumer price and the wholesale price index declined in the month of April.

Indices 3-May-03 10-May-03 Change
FTSE 3,969 4,049 2.0%
Nikkei 8,152 8,117 -0.4%
BSE 2,951 3,057 3.6%
Hang Seng 9,084 9,093 0.1%
NASDAQ 1,520 1,539 1.2%
Dow 8,605 8,679 0.9%
Dax 2,957 2,989 1.1%

Last week we saw Asian markets as the major gainers. This week the Indian markets topped the charts with BSE gaining about 4%. Asian markets however were lackluster. Nikkei was the sole loser among the major world indices. Japan's GDP growth stagnated for the first quarter in the current year and its exports declined. Also, concerns regarding the decline in exports in the next quarter owing to the effect of SARS virus cast a shadow on Asia. European markets gained this week. However, the recessionary situation in the Europe may be a cause of concern going forward.

(Price in US $) 3-May-03 10-May-03 Change
Satyam Infoway 7.7 6.9 -11.0%
ICICI Bank 6.0 6.5 8.3%
Dr. Reddy's 18.0 18.2 1.4%
Wipro 21.2 20.7 -2.6%
VSNL 3.4 3.6 5.8%
MTNL 4.2 4.2 -0.5%
Infosys 42.0 42.8 1.8%
Rediff 6.5 5.2 -20.5%
HDFC Bank 16.3 16.6 2.1%
Satyam 8.3 8.8 5.5%
Silverline 1.3 1.4 7.7%

Indian ADRs remained a mixed bag. ICICI Bank (8%) was the top gainer followed by Silverline Technologies (8%), VSNL (6%) and Satyam (6%). Both Sify and Rediff, which gained sharply in the last week declined at the same pace this week. Rediff is continuously losing ground post its poor results. Among the software ADRs, while Wipro lost about 3%, Satyam (6%) and Infosys (2%) gained strength. MTNL, which was gaining ground over the past two weeks, declined marginally this week. This is primarily on account of the rollback of the fixed line tariffs in India.

Though the US markets managed to gain for the fourth consecutive week, concerns regarding the deflationary situation facing America may see the economic growth slowing down going forward. Next week will see investors more clued into the US economic reports, as the result season is by and large over. Also, expectations of a further reduction in the interest rates by Fed chairman may also drive sentiment going forward.

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