The Hindu Business Line : Value, premium see further fall

LAST week saw equities decline in value in both the US as well as the Indian markets. Led by Hewlett-Packard, the US market dived into negative territory; Hewlett-Packard Co, which posted higher earnings, was hurt by analysts' concerns about slower growth in its money-making imaging and printing group.

The S&P 500 fell 0.2 per cent to 1144.11, its second weekly decline in 13 weeks. The Nasdaq Composite Index lost 0.8 per cent to 2037.93. According to Bloomberg, Nasdaq fell for a fifth straight week, the longest streak since October 2002. The Dow Jones Industrial Average finished last week with a small drop of 0.08 per cent.

Political concerns and the bunching of IPO issues seemed to have turned the market weak; the BSE Sensex fell 2.68 per cent and the NSE's S&P CNX Nifty dwindled by 60.95 points at 1852.65 points.

It was one of the bad weeks for the Indian ADRs as none of them finished last week in positive territory save Rediff.com. The US Government's decision to stop issuing new H1-B visas for specialised workers from countries such as India and China until October 1 seemed to have weakened sentiment for tech counters. This decision had even negated a couple of positive announcements from the Indian majors. For instance, Infosys Technologies announced that it had received an order to jointly develop and license BT Group Plc software that helps companies manage workforces more efficiently. According to Australian Financial Review, Telstra Corp is planning to move `large part' of its outsourcing operations to Satyam Computer.

But all these had little impact on the sentiment as Infosys tumbled to $83.13 over the previous week close of $89 and Satyam to $21 ($23.43).

Dr. Reddy's Lab, however, managed to end the week flat at $28.40 despite Pfizer Inc filing a lawsuit to block the former from selling a generic version of the $3.8-billion-a-year hypertension drug Norvasc. It may be recalled that Pfizer is already in legal tangle with Dr. Reddy's over amlodipine, the key ingredient in Norvasc.

VSNL announced a strategic tie-up with Asia Net com, the premier pan-Asian telecommunication services provider, to enhance India's connectivity to the Asia Pacific region. Under the new agreement, the company's proposed Tata Indicom India-Singapore cable connecting Chennai and Singapore will be ready for service by the fourth quarter of 2004 and aims to significantly enhance India's connectivity into the Asia-Pacific region and the US, via the Pacific. The company's ADR, however, finished lower at $7.36 ($7.75).

The steep fall at the Indian market affected the premium of the Indian counters with most of them are now trading at reduced premiums.

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