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K.S. Badri Narayanan

WEAK sentiment continued to afflict the US markets, pushing the Standard & Poor's 500 index below the crucial 1,000-mark for the first time since the September 11 attacks. In fact, for the fifth straight week, the US markets ended in negative territory.

Already plagued by negative sentiment such as weaker-than-expected recovery in corporate profits and concern over more terrorism, the reported news that drug major Merck & Co boosted revenue with accounting methods not used by its rivals weakened the markets further.

The S&P 500 closed at 989.14, the lowest since September 21, when the index reached a three-and-a-half-year low. The Dow Jones industrial average lost 2.3 per cent for the week, bringing its five-week drop to 11 per cent to close at 9,253.79. The tech-focussed Nasdaq tumbled 4.2 per cent this week to 1,440.96, also its lowest close since September 21.

It was no better at the domestic bourses, though the markets ended relatively better compared to the US markets. The dull sentiment on the US markets seemed to have affected the domestic markets and Indian ADRs.

Even some of the new developments from IT majors — Infosys and Wipro — failed evoke any positive response. During the week, Infosys announced the acquisition Trade IQ product division of the US-based IQ Financial Systems Inc. With this acquisition, Infosys' banking group will have ready-to-operate offices with employees in London and Tokyo.

Wipro has set up a software development centre for Toshiba. However, both the counters (in the domestic and the US markets) finished in negative territory. While the Infosys ADR closed the week at $53.19 as against the previous week close of $57.51, Wipro closed at $30.06 ($31.43). Both these counters maintained at the previous week premium levels in relation to the domestic share prices.

The other two IT majors — Silverline Technologies and Satyam Computer — also faced a similar fate to finish the week in weak zone.

However, the MTNL ADR was able to maintain its positive trend. The ADR finished the week at $6 ($5.69), while in the domestic market the stock closed at Rs 149.15 (Rs 143). Expectation of higher dividends coupled with disinvestment hopes seemed to have influenced the counter. However, later the company denied any such dividend plans. The ADR so far gained 23.45 per cent during the month. The other telecom major, VSNL, also ended relatively on better note. It finished at $6.85 ($6.90).

The premium for ICICI Bank ADR slumped to 15.41 per cent (30.51 per cent). While the ADR closed with a drop of 14.28 per cent at $6.60 ($7.70), the domestic equity slipped marginally by 3.21 per cent to Rs 139.90 (Rs 144.55), thus explaining the steep fall in the premium.

The other ADRs also ended on a weak note, though there were no perceptible changes in their premiums.

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