Financial Daily from THE HINDU group of publications
Monday, Sep 09, 2002
Columns - ADR Watch
Premium drops in ICICI Bank counter
K.S. Badri Narayanan
BOTH the US and Indian bourses ended last week on a weak note compared with the previous week. Even the Friday rally was not enough for the US markets to end in positive zone.
The Anglo-American attack on the Iraq earlier spoiled the party for the US bourses though they later recovered part of their losses on the US Government report that showed the fall in unemployment rate.
The S&P-500 fell 2.4 per cent in the four-day trading week, the Dow Jones Industrial Average 2.7 per cent and the Nasdaq Composite Index 1.5 per cent.
The domestic bourses suffered mainly on the worry over the disinvestments process. (The investors' apprehension turned true as the Government deferred the disinvestments of HPCL and BPCL on Saturday). On the back of this, the Bombay Stock Exchange's Sensex fell to 3141.11 over the previous week close of 3181.23 and the National Stock Exchange's S&P CNX Nifty to 995.20 (1010.60).
As for Indian ADRs, it was one of the quiet weeks, as most ADRs remained range-bound.
Infosys Technologies announced that its pricing pressures with clients had been stablised. Mr S.D. Shibulal, Head of Customer Delivery, Infosys, said: "the company agreed to 'share the pain' with existing customers by lowering prices in the face of the slowdown in information technology spending, but that's subsided now."
But this statement was not enough to shore up Infosys at the stock markets. The ADR finished slightly higher at $57.41 ($56.60). It now trades at a premium of 57.85 per cent to its underlying stock. The counter was trading at a premium of 51.72 per cent during last weekend.
Wipro also ended flat at $26 ($26.10) without any change in its premium.
The company announced the picking up of two per cent stake of Spectramind Services Pvt Ltd, from American Express Travel Related Services Company Inc.
Both VSNL and MTNL lost ground during the week.
VSNL was given October 1 as deadline by the Union Communications Minister, Mr Pramod Mahajan, to finalise its interconnect agreements with MTNL and Bharat Sanchar Nigam Ltd
VSNL is the carrier of choice of BSNL and MTNL as part of an agreement covering the sale of the overseas call company to the Tata Group.
The agreement runs until April 2004. VSNL, the monopoly overseas call carrier until March 31 this year, may lose most of its business if the Government basic telecom operators switch over to its rivals x x Bharti and Data Access.
VSNL closed the week at $4.87 ($5.31) while MTNL at $4.85 ($5.25).
The premium in the ICICI Bank counter dipped sharply to 5.06 per cent (11.93 per cent) while the ADR closed weak at $6.18 ($6.63).
The counter witnessed hectic trading during last Friday with volumes soaring to 13.42 lakh shares on the BSE with several block deals taking place; This deal raise a doubt whether these transactions took place to convert them into ADRs to take price advantage in the US markets.
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