• OCTOBER 6, 2003

Global markets bounce back

US markets, after having witnessed weakness during the second half of September, managed to stage a comeback and closed last week in the positive. While the Dow gained about 3%, the NASDAQ closed higher by about 5%. The week started on a positive note on account of buying witnessed in technology and semiconductor stocks. News that the global chips sales for the month of August rose 4% as compared to July, increased investor optimism towards the sector.

Markets remained mixed for the next two days. Sun Microsystems issued a warning on Tuesday indicating that its first quarter losses would be much higher than expected, which led to weakness on the US bourses. The impact of the news was also reflected in the losses of other technology stocks. However, the markets bounced back on Wednesday on the back of positive economic reports regarding manufacturing sector and construction spending. Auto stocks were also a part of the rally on account of positive news regarding increase in volumes sales for the auto majors.

The northward movement continued towards the rest of the week. However, a slew of economic reports, which gave mixed signals about the growth of the US economy, led to volatility on Thursday. While the weekly unemployment numbers were encouraging, poor factory orders dampened sentiments to some extent. On Friday, however, the markets continued to gain ground on account of positive news regarding jobs growth. It must be noted that in the last eight months, the markets have added jobs for the first time in the month of September, which provided cheers to investors on the US bourses.

(Price in US $)27-Sep-034-Oct-03Change
HDFC Bank21.222.98.1%
Dr. Reddy's22.824.47.0%
Satyam Infoway6.16.56.6%
ICICI Bank10.611.26.3%

Backed by strong gains on the domestic bourses, Indian ADRs continued to gain ground last week. Software ADRs continued to be the top gainers. It should be noted that technology stocks have been gaining ground since the last two months on account of hopes of an increase in global IT spending. Moreover, the Indian tech majors are due to announce their quarterly results and the markets seem to be expecting, not only matched expectations, but improved earnings guidance from Indian tech bellwethers. On the pharma front, Dr. Reddy’s, after witnessing weakness for the latter half of September, gained ground during last week. It should be noted that Indian ADRs have gained significant ground over the past few months and most of the ADRs are trading near their 52-week highs.

Hang Seng11,29011,8024.5%

Global indices also closed last week in the positive. Top gainers included NASDAQ (5%), Hang Seng (5%), Nikkei (4%) and BSE Sensex (4%). News regarding job growth in the US during the month of September increased investor confidence, further cementing the belief of a US recovery. Any positive news in the world’s largest economy (USA) is seen as a positive sign globally and this was one of the reasons for optimistic sentiments witnessed during last week for major world indices. However, caution needs to be exercised, as the economic reports still remains mixed and signs of recovery continue to remain hazy.

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