The Hindu Business Line : Weak undertone

GLOBAL indices continue to trade weak. With the fears of interest rate hikes by the US Federal Reserve mounting, key indices in the US market declined over the week.

The Dow Jones industrial average fell 1.01 per cent to 10012.87. The S&P 500 index, which has been on the downtrend in the last couple of weeks, declined this week as well, although marginally. The Nasdaq composite index shed 0.7 per cent to close at 1904.25. Asian markets witnessed a steeper fall. The Nikkei declined by a little more than 5 per cent over the week.

However, the issues of the interest rate hike or the Chinese economy slowdown were buried in the background in the Indian markets. It was carnage on the bourses this week. A close fight to the finish, the surprise victory of the Congress jolted the markets. A selling frenzy took hold of the markets on Friday with many investors apprehensive about the direction the reforms process would take. The BSE Sensex fell 330 points, its steepest fall in four years, ending the week at 5069.87. The Nifty declined by 135 points to close at 1582.40. FIIs turned net sellers this week, selling $250 million -$300 million worth of equity.

For the ADRs, it was a poor performance this week, as overseas investors also turned bearish. All counters closed on negative note. The Bank of New York Indian index declined by nearly 13 per cent to end at 392.76 down from points (450.31). Telecom stock MTNL witnessed the sharpest decline. It closed at $6, 20 per cent lower than the previous close of $7.54. VSNL declined by 7 per cent to close at $6.26. The telecom stocks had traded weak in the counters the previous week as well.

Banking counters also saw sharp declines, with ICICI Bank declining nearly 20 per cent to close at $12.65, down from $ 15.78. HDFC Bank also finished lower by about 15 per cent.

Among tech majors, Infosys slumped to $74.65, down 11 per cent. The company had been in the limelight last week and had gained 4 per cent. Wipro plunged by about 13 per cent.

On the premium front, most ADRs saw a fall in their premiums with respect to the underlying equity.

Dr Reddy's was interestingly an exception. The ADR was quoting at a discount of 3.42 per cent last week. However, it now quotes at a premium of 0.31 per cent to its underlying equity.

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