The Hindu Business Line : Premium widens for Infosys

THE stock markets, here and in the US, continued to reel under pressure last week. Investor confidence eroded thick and fast with more negative reports affecting the market mood. The US Government data indicated manufacturing and jobs growth is faltering and in another front, Walt Disney Co, a media major, issued a forecast stating that its profit would decline this quarter.

For the domestic markets, in addition to the negative developments in the US, poor monsoon played a spoilsport, driving away more and more investors from the market.

In this backdrop, the Dow Jones Industrial, which opened the week on a promising note, closed at 8313.13 over the previous week close of 8264.39 (after registering an intra-week high of 8762.14). However, the tech-focussed Nasdaq slipped to 1247.92 (1262.12). Back home, the Bombay Stock Exchange Sensitive index finished lower at 2985.01 (3024.35) and the NSE's S&P CNX Nifty edged down to 954.75 (973.50).

However, Dr. Reddy's Laboratories, Infosys Technologies and HDFC Bank closed the week on a firm note.

Dr. Reddy's Lab seemed to have edged up on the strength of its financial performance for the quarter ended June 30, 2002. DRL announced a 50-per cent jump in net profit at Rs 80.14 crore as against Rs 53.51 crore registered in the same quarter last year and net sales increased to Rs 357.38 crore (Rs 283.84 crore). The financial performance seemed to have undone the negative sentiment that followed Nova Nordisk decision to suspend the ongoing clinical trails on the anti-diabetic molecule of DRL. The DRL ADR finished the week at $19.05 against the previous week close $16.68.

Despite the adverse signal from the US, (which accounted for 63 per cent of the country's total software exports in the year ended March 31), Infosys finished firm at $53.41 ($49.49). However, on the BSE, the Infosys stock closed slightly lower at Rs 3012.60 (Rs 3016.60). The strong gain in the US markets helped the counter trade in a higher premium in relation to its underlying stock. Infosys ADR now trades at a premium of 72.52 per cent compared to 59.77 per cent it was trading during the last weekend. However, other IT majors — Satyam Computer and Wipro — closed the week on a negative note at $8.05 ($9.10) and $22.92 ($24.36) respectively. Silverline Technologies finished on a flat note at $1.20.

It may be mentioned here that Satyam Computer has clarified its position to the reported news that it is facing an inquiry by the Department of Company Affairs over alleged violations of the Companies Act. The company clarified that it had already provided the DCA with the clarifications asked for. This development seemed to have affected the counter. On the BSE, the stock closed at Rs 128.15 (Rs 134.85).

Fresh from WorldCom fiasco, VSNL closed the week on a negative note at $5.10 ($5.28). In the meanwhile, VSNL reported a drop of 29 per cent in net profit at Rs 261.20 crore (Rs 365.50 crore) while total income fell to Rs 1,428.50 crore (Rs 1,642.10 crore).

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Premium widens for Infosys