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Monday, Nov 15, 2004

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Satyam falls, its premium crashes

K.S. Badri Naraynan

THANKS to the softening of oil prices, the US markets witnessed a sharp rally last week. Besides, Dell Computer's announcement that demand for computer is healthy also pushed up the key benchmarks. As a result, the Standard & Poor's 500 Index recorded its best three-week rally in two years.

For the week, the S&P 500 rose 1.5 per cent to 1184.17, its highest since August 2001. The Dow average advanced 1.5 per cent to 10,539.01 and the Nasdaq added 2.3 per cent to 2085.34. According to Bloomberg data, this was its longest weekly winning streak since a six-week climb in December 2003 to January 2004.

The local bourses also witnessed a sharp jump on the back of continuous foreign institutional buying. The BSE Sensex, which breached the crucial 6,000 mark on New Year day (Samvat 2061 according to Hindi calendar), closed at 5964.01, a gain of 1.23 per cent over the previous week's close, while the NSE's S&P CNX Nifty posted a gain of 1.11 per cent.

Except techies, other Indian ADRs finished on a firm note. HDFC Bank, in fact, recorded its fresh 52-week high at $40.38 before closing the week at $40.10 against the previous week close of $37.11. Optimism that it will price its proposed ADR (by about $300 million) issue at a premium to the local shares seemed to have influenced the counter. ICICI Bank, which is likely to review its rates this week, also finished firm at $17.05 ($16.68).

Dr. Reddy's also ended firm at $17.58 ($17.32) after the company said that it appointed Mr Alan Sheppard as Head of Generics Business in Europe. Also, the company said in its 13F filings with SEC that Mellon Bank has bought 1.86 million ADRs.

Market talk that Satyam Computer is planning to convert some shares to ADR seemed to have affected both the counter and its premium. The ADR fell sharply to $26.37 per cent ($28.26) while its premium tumbled to 47.15 per cent against the previous weekend's premium of 62.61 per cent.

Reports that a group led by ICICI Securities Ltd has been chosen by the Government to advise in the merger of MTNL and BSNL appeared to have lifted the spirit for former as it ended firm at $8.15 ($7.83).

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