Financial Daily from THE HINDU group of publications
Monday, Jul 22, 2002
Financial Daily from THE HINDU group of publications Monday, Jul 22, 2002 |
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Markets
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Commentary Columns - ADR Watch Mixed feeling for Indian counters K.S. Badri Narayanan
DISAPPOINTING forecasts, accounting maladies, regulatory probes... what else is needed for the beleaguered US markets to seek new lower levels? With more and more investors revolted by the recent stinking revelations, the Dow Jones Industrial Average index touched the lowest level of 7966.72 during last week since 1998. The Dow finished the week at 8019.26 against the previous week close of 8684.53, losing 7.65 per cent during the week. The tech-heavy Nasdaq dropped about four per cent at 1319.15. The domestic markets — the Bombay and the National stock exchanges — also ended the week in negative territory, however, for different reasons. The renewed political tensions between India and Pakistan following the recent killings in Kashmir, the failure of monsoon so far in most part of the country and the indifferent attitude of foreign institutional investors, had its impact on domestic bourses. However for the Indian ADRs, it was a mixed feeling. While counters such as Dr. Reddy's Lab, HDFC Bank, MTNL, VSNL and Satyam Infoway finished on a firm note, IT majors — Infosys, Wipro, Satyam Computer and Silverline Technologies witnessed selling pressure. Wipro announced disappointing numbers for the first quarter ended June 30, 2002. Its net profit fell by 24 per cent to Rs 162.70 crore for April-June 2002, against a net profit of Rs 214 crore posted a year-ago. However, Wipro's revenue rose by 16 per cent. The fall in net profit was after accounting for a loss of Rs 38.9 crore from the discontinued IP business. (The business was disposed off during the quarter, with the corporate customers being taken over by Sify, Wipro stated.) Excluding this one-time charge, the fall in net profits would be around six per cent y-o-y basis. For Wipro it was the general depressed sentiment at the global level for the IT sector, rather than the result, which was out only on Friday, that seemed to have affected the counter the most. The impact of the result will only be reflected in the coming week. The Wipro stock closed the week at Rs 1,261.85 (Rs 1,303.60). Infosys, Satyam and Silverline Technologies finished the week at $49.3564 (56.90), $9.86 ($10.65) and $1.42 ($1.57) respectively. The premiums of Infosys and Satyam ADR to that of respective underlying stocks fell sharply. While Infosys now trades at a premium of 51.97 per cent as against the previous week's close of 67.15 per cent, Satyam ADR now rules with a premium of 1.33 per cent (7.44 per cent). There was not much deviation in the premium of other ADRs. Dr. Reddy's Lab witnessed buying interest following news that the company has filed for approval to market a generic form of Novartis' anti-fungal drug `Lamsil' in the US. The ADR closed the week at $21.35 ($20.23) while the stock at Rs 1014.35 (Rs 993.25). Satyam Infoway, which is facing the threat of being delisted from the Nasdaq following is dismal performance at that exchange, finished firm at $.60 ($.489).
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