The Hindu Business Line : IT counters' price, premium widen

THANKS to better-than-expected economic indicators such as factory orders and accelerating job growth helped the US markets end last week in positive territory. In fact, it was fourth consecutive weekly gain for S&P-500. According to Bloomberg, this was the benchmark's longest winning streak since January.

This week, the S&P 500 added 0.5 per cent to 1113.63, leaving it 0.2 per cent higher for the year. The Dow Jones Industrial Average gained 0.6 per cent to 10,260.20, while the Nasdaq Composite Index lost one per cent to 1844.48, following Intel's weak forecast for the third quarter.

The domestic markets climbed despite more-than-expected inflation numbers and climbing oil prices. The BSE Sensex edged up two per cent to 5218.46 and the NSE's S&P CNX Nifty gained 1.5 per cent.

Despite weak Nasdaq and profit warning by Intel, Indian infotech ADRs finished on a firm note. In fact, Infosys touched its 52-week high at $** , before settling the week at $53.56 against last week close of $50.54. Satyam at $21.46 ($19.79) and Wipro at $17.6 ($16.69) also closed on a firm note.

Satyam announced that it opened its biggest overseas office in Melbourne and has plans to recruit engineers in Malaysia.

The tech ADRs not only gained in value but were also able widen their premiums in respect to their underlying equities; Infy now trades at a higher premium of 54.33 per cent (49.62 per cent), Wipro at 40.14 per cent (35.97 per cent) and Satyam at 38.95 per cent (34.98 per cent).

After peaking to $16.15 during the week, Dr. Reddy's Lab closed at $15.7 (15.62). The company's decision to withdraw its US challenge to a patent for the fungal treatment Lamisil, Novartis's fourth-best selling medicine last year, seemed to have affected the sentiment. VSNL announcement that its US unit won a Federal Communications Commission licence to carry international calls appeared to have helped its ADR to end firm at $7.5 ($7.34).

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