The Hindu Business Line : Infy premium drops

REPORTS of rising retail sales, better-than-expected consumer sentiment and falling initial jobless claims seemed to have induced a fresh confidence in the US markets. As the hopes on economy revived, the US markets closed last week in positive territory. The S&P-500 gained 1.7 per cent to 909.83 against the previous week close of 894.41 and the tech-focussed Nasdaq surged 3.8 per cent to 1411.14 (1359.28). For the Dow Jones Industrial Average, the uptrend was undisturbed for the sixth straight week; Dow closed at 8579.09 (8537.13), a marginal gain of 0.5 per cent.

For the Indian bourses, the recast of Morgan Stanley Capital International Index and the decision of Moody's to review forex credit rating for a possible upgrade acted as catalysts. In its recent recast, MSCI raised India's weightage to 3.14 per cent from 3.12 per cent. Apart from the above factors, renewed interest in the infotech counters following signs of recovery in the US market helped the markets close on firm note. The Bombay Stock Exchange's Sensitive index rose to a seven-week high. It closed at 3033.91 (2956.84) and the National Stock Exchange's S&P CNX Nifty at 990.35 (956.95).

The visit of Microsoft Chief, Mr Bill Gates, to India seemed to have rekindled hopes on tech counters. Wipro was the biggest gainer among the tech counters, as the counter closed at $33.6 ($29.25). The stock also finished on a firm note at Rs 1595.90 (Rs 1420.05). The gain has to be seen in the backdrop of Wipro getting a business process outsourcing order from Microsoft Corp.

Satyam Computer also closed on firm note at $12.18 ($11.22). However, after registering its 52-week high during the previous week, Infosys Technologies counter is witnessing downtrend in the US markets. Infy closed the week at $72.71 ($75.45), though the Indian markets reposed faith in the IT major; the stock closed the week on firm note at Rs 4330.80 (Rs 3999.20). These contra-movements also pushed down the premium of the Infosys ADR. The ADR now trades at a reduced premium to the underlying stock at 61.85 per cent as against the previous weekend premium of 82.15 per cent.

Banking counters, HDFC Bank and ICICI Bank, touched their new 52-week lows during the week. While HDFC Bank closed around the 52-week low levels, the ICICI Bank counter recovered strongly. The ICICI Bank's entry into the MSCI Index could be the reason behind for its revival. After touching a 52-week low of $3.99, ICICI closed the week at $5.19 ($5.53).

Another counter, which saw its fortune rise was Dr. Reddy's Lab. After touching new 52-week low during the previous week, Dr Reddy's recovered on strong note to close at $14.87 ($14.25).

VSNL also saw its value picking up after the recent battering. Reports that VSNL is likely to launch national long distance telecom services by December seemed to have triggered a fresh interest in the counter. VSNL closed the week at $3.85 ($3.81).

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