Financial Daily from THE HINDU group of publications
Monday, Jan 05, 2004
Columns - ADR Watch
Indian counters on song
K.S. Badri Narayanan
IT was a happy transmission from 2003 to 2004 for the equities as they witnessed sharp gains with investors' confidence brimming on various feelgood factors including signs of recovery in the US economy.
The US stocks rose for a straight sixth week with Dow Jones Industrial Average gaining 1.1 per cent last week; the tech-laced Nasdaq breached the psychological 2,000-mark to end at 2,006.68 with a gain of 1.7 per cent while the broad-based S&P-500 gained 1.2 per cent.
For the domestic bourses, the strong GDP numbers acted as a catalyst as the BSE's Sensitive index closed at a record high level of 6,086, the first time since its inception. The NSE's S&P CNX Nifty also surged to 1,946.05.
The strong economic numbers lifted the Indian counters at the US bourses; in fact, all the counters barring Sify and Rediff.com registered new 52-week highs during the week.
Dr Reddy's Laboratories registered its year high at $32.32 before closing the week at $32.2 against last week's closing level of $31.68 despite GlaxoSmithKline Plc having sued the company, alleging that it plans to sell a generic version of Imitrex infringe on a Glaxo patent for the migraine drug.
Dr Reddy's also announced the filing of an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration for sumatriptan succinate oral tablets during the week.
Banking counters gained on hopes that expanding economy will help revive credit demand and boost bank earnings. ICICI Bank closed higher at $18.33 ($15.68) after touching 52-week high at $18.76. HDFC Bank, however, closed lower at $31.8 ($33.10) after registering its new high at $34.43 during the week.
The Indian Government's decision to cut by two percentage points the amount phone companies have to pay it lifted the MTNL counter to a new peak of $8. It closed at $7.4 ($6.25). VSNL also closed sharply higher at $7.91 ($6.65) after touching a new 52-week high of $8.3.
Anything that bodes well for the US economy is good for Indian infotech companies, which largely depend on that country for revenues.
The Organization for Economic Co-operation and Development estimates its 30 member countries, which include the US, Japan and Germany, will grow an average of three per cent in 2004, compared to about two per cent last year.
The US economy expanded an annualised 8.2 per cent in the third quarter. As a result, Infosys, Satyam Computer and Wipro not only finished the week on a higher note but were able to widen their premium.
Satyam ADR now trades about 96 per cent premium to its underlying stock. Infosys's premium widened to 60 per cent and Wipro's to 34 per cent.
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