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Monday, Jul 18, 2005

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Infy leads tech slide, VSNL sizzles

K.S. Badri Narayanan

THANKS to strong financial performance from corporate majors such as PepsiCo and Apple Computer coupled with robust economic reports on inflation and retail sales boosted the sentiment for the US stocks.

The S&P 500 climbed 1.3 per cent to 1227.92, the Dow Jones Industrial Average jumped 1.8 per cent to 10,640.83 and the tech-focussed Nasdaq surged 2.1 per cent to 2156.78.

For the domestic markets, the continued FII inflow helped them to end in positive territory amidst volatile condition. The BSE sensex hit new all-time peak of 7352.46, before ending the week up 0.82 per cent while the NSE's S&P CNX Nifty gained 0.74 per cent at 2212.55.

Despite strong show by Nasdaq, Indian tech majors suffered. The worst hit among them was Infosys, which turned in lower-than-expected financial performance for the quarter ended June 2005. The company announced a 37-per cent rise in net profit to Rs 523.58 crore against Rs 394.47 crore reported in the same period last year. Total income increased to Rs 1,997.49 crore (Rs 1,489.38 crore). The ADR fell 10 per cent to $70.17 against the previous week close of $77.91.

Other software majors also fell after Infosys announcement; Satyam declined to $26.05 ($26.83) and Wipro to $20.25 ($21.19).

HDFC Bank's first quarter financial performance also failed impress the market participant; its ADR dwindled 8.4 per cent to $45.60 ($49.78). The bank's first-quarter profit rose 31 per cent to Rs 183.53 crore (139.97) crore, fell short of market expectations. ICICI Bank also finished on weak note at $23.45 ($24.29).

However, VSNL stole the limelight by gaining 27.59 per cent to $15.53 ($12.25) amidst reports that it is planning to acquire a telecommunications company. However, VSNL denied such reports. "We would like to state that as of date there is no such proposal for the acquisition of a domestic telecom company before the board," it said in a statement to the stock exchanges.

MTNL, the other telecommunication major, also finished on firm footing at $7.18 ($6.80).

Tata Motors was the other counter to finish firm at $10.55 ($10) while Dr. Reddy's Lab slipped to $17.36 ($17.70).

On the premium front, Infosys, ICICI Bank and HDFC Bank saw the premium dipping to 39.1 per cent (45.44 per cent), 15.84 per cent (24.63 per cent) and 4.95 per cent (11.97 per cent) respectively.

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