The Hindu Business Line : Infosys back to higher premium

THE US market at last was able to break the downward slide after failing six consecutive weeks. The rally came after Aetna Inc and Yahoo Inc announced better-than-expected results. Besides, General Electric Co also came out with decent numbers, which matched market projections. The good news helped the S&P 500 and the Dow Jones Industrial Average indices to recover from five-year lows.

Last week, the S&P 500 and Dow gained 4.3 per cent to close at 7850.29 and 835.32 respectively. The gain was even sharper for the Nasdaq, which gained 6.2 per cent to close the week at 1210.47. None of the indices had risen since August 23.

The domestic market also witnessed a rally on the back of some good corporate performances, particularly by IT majors. Infosys, Mastek and MphasiS BFL all announced decent numbers invoking investors' confidence.

The Bombay Stock Exchange finished 2.2 per cent higher at 2995.77 (after piercing the crucial 3,000-barrier) and the National Stock Exchange's S&P CNX Nifty closed at 971.02 against the previous week close of 948.20.

Among the Indian ADRs, Infosys was the frontrunner with significant gains. The strong show by Infosys came in the backdrop of its second quarter numbers; the company recorded a strong double-digit sequential growth exceeding its own revenue guidance.

For the quarter ended September 30, 2002 Infosys achieved a 12-per cent rise in its net profit while sales surged 35.29 per cent.

The ADR finished on a strong note at $64.75 against the previous week close of $53.36 after touching a high of $67.20 during intra-week.

The rally also helped the counter recover its premium (to the underlying stock). Infosys ADR now trades at a higher premium of 66.40 per cent, which dipped below 50 per cent at 47.48 per cent during the last weekend. The stock closed the week at Rs 3761.25 (Rs 3499.50) on the BSE.

The Infosys numbers also cheered its peers as Wipro and Satyam Computer finished the week on a firm note. Wipro closed at $30.49 ($27.03) while Satyam at $9.29 ($8.90). Wipro is scheduled to announce its results during the week.

It was a mixed trend for banking counters, HDFC Bank and ICICI Bank.

While HDFC Bank closed firm at $14.13 ($13.82), ICICI Bank suffered to end weak at $5.80 ($6.18). The ICICI Bank stock also closed weak at Rs 137.90 (Rs 143.55).

Last week, the Supreme Court restrained banks from selling the seized assets of defaulters. This order could dampen banks' effort to trim their bad loans. This appeared to be affected the sentiment for ICICI Bank.

The Cellular Operators Association of India's monthly subscriber data seemed to have lifted sentiment for MTNL. The counter closed firm at $4.73 ($4.51) though the underlying stock finished flat at Rs 110.85 (Rs 110.70).

The data revealed that MTNL signed up an additional 18,175 subscribers during September, and now has more than one lakh users in New Delhi.

Pharma major Dr. Reddy's Laboratory also ended the week in positive territory at $17.48 ($16.60). VSNL, however, closed marginally lower at $4.49 ($4.50).

Premiums remained around the same level for most of the ADRs.

Satyam Infoway (Sify) on Saturday said its fiscal second-quarter loss narrowed to $9 million as it added subscribers and corporate customers.

The loss was $115.5 million in the period ended September 30, 2002, including a $109.3 million charge for acquisition costs. Excluding one-time costs, the year-earlier loss was $7.7 million, the company said. Sify closed on weak note at $1.149 ($1.60).

It may be recalled that earlier this month, Softbank Asia Infrastructure Fund, a unit of Japan's Softbank Corp, and VentureTech Solutions Pvt Ltd, said they would buy 33 per cent in Sify for $20 million, from Satyam Computer.

This will reduce the Satyam's stake in Sify to 35 per cent from the current 52.5 per cent.

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