The Hindu Business Line : Satyam, ICICI Bank fall sharply

Both the US and the Indian markets witnessed selling pressure though the magnitude for the latter was quite heavy. The Dow Jones Industrial Average declined by 0.9 per cent and the S&P 500 by 0.3 per cent, even as the Nasdaq rose 0.8 per cent on concern that more Americans will default on home loans.

On the other hand, the BSE Sensex and the NSE's S&P CNX Nifty saw a steep fall, the highest in nine months; a decline of about five per cent was seen following sustained inflation pressures and mounting interest rates.

Except Patni Computers and Sify, all Indian ADRs declined in value.

ICICI Bank, Satyam Computer and VSNL were the worst hit, tumbling more than six per cent.

ICICI Bank lost 6.1 per cent while the other banking counter, HDFC Bank, slipped 4.7 per cent on the back of increase interest rates, which may in turn affect toplines. ICICI Bank, in fact, increased its lending and deposit rates by 0.5 percentage points last week. Following ICICI Bank's move, there were apprehensions that banks may not be able to maintain the level of growth witnessed in the past few years.

The fluctuating rupee seemed to have weakened the IT counters. While Satyam tumbled six per cent, Infosys slipped 3.6 per cent and Wipro 4.4 per cent. .

As the fall in the underlying equities was more pronounced than the ADRs, premium for the ADRs widened further.

For instance, the Dr Reddy's ADR fell 5.3 per cent against its underlying stock's fall of 7.21 per cent, thus pushing up the premium to 5.3 per cent against last week's 1.24 per cent. However, the biggest gain in premium was in Wipro, the ADR of which fell 4.42 per cent against the stock's fall of 7.8 per cent, pushing up the premium to 24.2 per cent (18.8 per cent).

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