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K.S. Badri Narayanan

WITH the prospects for corporate profit recovery this year seeming dim, as suggested by recent first-quarter profit reports from a couple of leading companies, the US markets slumped to their biggest weekly losses since September. Moreover, the performance of the three IT biggies — Infosys Technologies, Wipro and Satyam Computer — and their subsequent announcement of current fiscal outlook also failed to impress market players, both at home and in the US markets.

Besides, the Securities and Exchange Commission Chairman, Mr Harvey Pitt's announcement this week that his agency would investigate conflicts of interest by Wall Street stock analysts added tension to the already beleaguered market; the net result - the Dow Jones Industrial Average slumped below the crucial mark of 10,000 to close the week at 9910.72, the first time since February 22. The tech-laced Nasdaq was not far behind, as it fell to 1663.89 (1796.83), to register the year's low.

Despite political tension following Gujarat imbroglio, the domestic markets were able to hold on to the ground. While the BSE Sensex finished a shade higher at 3371.70 (3364.40), the S&P CNX Nifty fell marginally to close at 1074.40 (1100.30).

With the equities showing a relatively stable trend, their premiums for the ADRs dipped sharply. The ADR of Infosys now trades at a premium of 59.33 per cent (71.83 per cent). The ADR fell to $62.02 ($67.65) while the underlying equity was flat at Rs 3812.75 (Rs 3850.70). Satyam and Wipro also trade at a reduced premium of 7.21 per cent (12.93 per cent) and 1.54 per cent (6.94 per cent) respectively. As in the case of Infosys, both these ADRs witnessed a sharp fall.

The premiums for ICICI and ICICI Bank, which recently got the RBI nod for merger, also dipped sharply. ICICI now trades at a premium of 14.36 per cent (23.97 per cent) and ICICI Bank at 9.31 per cent (19.93 per cent). Both these ADRs witnessed a sharp fall at $6.55 ($7.25) and $5.10 ($5.65) respectively.

Almost all the ADRs witnessed a moderate to sharp downfall during the week. However, Dr. Reddy's Lab was able to finish in the positive territory. It closed at $22.35 ($21.96) with an improved premium of 7.98 per cent (5.09 per cent). The stock finished at Rs 1013.70 (Rs 1021.95) at the BSE.

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