Financial Daily from THE HINDU group of publications
Monday, Dec 09, 2002
Financial Daily from THE HINDU group of publications Monday, Dec 09, 2002 |
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Markets
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Commentary Columns - ADR Watch Infy counter sees drop in price, premium K.S. Badri Narayanan
DISAPPOINTING sales forecasts from companies such as AOL Time Warner Inc and Hewlett-Packard Co and a Government report showing an unexpected drop in jobs last month seemed to have halted the Dow's longest weekly winning streak in more than 4 ½ years. In the week just ended, the Dow recorded its first losing week in nine, dropping 2.8 per cent to 8645.77 against the previous week close of 5596.09. The Standard & Poor's 500 Index shed 2.6 per cent to 912.23 (936.31), and the tech-focussed Nasdaq declined 3.8 per cent to 1422.44 (1478.78), ending their three-week streak of gains. On the other hand, the Indian bourses surged strongly following the signal from the Government on its commitment to the disinvestment programme. The Bombay Stock Exchange's Sensitive Index gained 2.4 per cent to 3306.29 (3228.82) and the National Stock Exchange's S&P CNX Nifty 1.87 per cent to 1069.80 (1050.15). Moving to ADRs, in an immediate reaction to Infosys Technologies' proposal to sponsor further American Depository Receipts (ADRs) issue, the Infy counter on the Nasdaq plummeted by almost 15 per cent on Friday amid concerns of more floating ADRs. On Friday, the counter registered the highest volumes of over 5 lakh ADRs in the year. Infy closed the week at $68.52 as against the previous week close of $82.75. Following the fall, the premium of Infy ADR to the underlying stock also fell sharply to 48 per cent against the previous weekend premium of 76.4 per cent. In a related development, the company's board on Sunday approved the conversion of two/three million equity shares into American Depository Shares. "The board of directors of Infosys Technologies announced the sponsorship of an international ADS (American Depository Shares) offering, against equity shares held by its existing shareholders in India, at a price to be determined by the lead manager to the offering," the company said a statement. The company had raised $60 million in an earlier sale on Nasdaq. Two ADRs are equal to one local share of Infosys. Incidentally, the Infy ADR recently touched its new 52-week high at $86.25 on November 21. Satyam Computer, however, maintained its upward momentum to finish at $13.32 ($12.72) while Wipro finished weak at $33.51 ($35.71). While Dr. Reddy's, HDFC Bank, Silverline and MTNL finished on firm note, telecom majors VSNL and MTNL closed on poor note. Internet firms Sify and Rediff.com ended on negative note. The Silverline counter has been moving up sharply in recent times despite the company's $7.25 million short-term debt being downgraded by CARE. Silverline planned to generate cash by selling $15 million worth GDRs (Global Depository Receipts), CARE said. The ADR closed the week at $1.16 ($.92). But for Infosys, other ADRs held on their previous weekend premium/discount levels.
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