The Hindu Business Line : ADRs, underlying equities see divergent trend

Though the US Federal Reserve did not raise the interest rate in its latest meeting on August 8, a weak trend persisted at the US markets on economic concern.

As a result, the S&P 500 lost one per cent to1266.74, the first weekly drop since the period ended July 14.

The Dow Jones Industrial Average slid 1.4 per cent to 11,088.03, snapping a three-week winning streak. The Nasdaq Composite Index declined 1.3 per cent to 2057.71 for its second straight weekly drop.

However, sustained buying by foreign and domestic funds helped the domestic market score handsome gains. While the BSE Sensex finished the week with a gain of 3 per cent, the NSE's S&P CNX Nifty spurted by 3.3 per cent.

Despite strong show by the domestic markets, the Indian ADRs saw a mixed week.

Among them the star performers were Tata Motors and VSNL both gaining in excess of 4 per cent. Tatas' plans to hike their stake in their group companies seemed to have perked up interest in the counter.

While IT counters Infosys Technologies and Satyam Computer finished firm by 3.6 per cent and 0.25 per cent respectively on the BSE, the ADRs of these counters, however, ended on a negative note by 0.16 per cent and 0.74 per cent respectively.

Wipro ADR, which closed weak at $12.28 against the previous week close of $12.5, a drop of 1.76 per cent, saw its underlying equity dipping marginally by 0.15 per cent at Rs 506.55 (Rs 507.35).

Patni Computers ADR slipped 0.19 per cent, while the stock gained 0.20 per cent at Rs 346.35 (Rs 345.65).

The divergent trend was more prominent in the case of ICICI Bank. While its ADR closed 0.48 per cent lower at $26.46 ($26.59), its underlying stock on the BSE gained 6.8 per cent at Rs 584.5 (Rs 547.3).

As a result of the divergent trend, the ADRs' premium dipped. ICICI Bank's premium slipped to 5.3 per cent (13.09 per cent), Infosys to 10.76 per cent (15.07 per cent),

Patni Computers to 1.81 per cent (2.29 per cent), Satyam to 7.17 per cent (8.32 per cent) and Wipro's premium to 12.78 per cent (14.7 per cent).

ADRs of HDFC Bank and Dr Reddy's gained by over 2 per cent while MTNL ADR gained 1.31 per cent.

Sify.com and Rediff.com witnessed a sharp fall while WNS, the recently listed ADR, finished flat at $25.4 ($25.09).

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