The Hindu Business Line : ICICI Bank witnesses higher volatility

The US Government plans to mop up billions of dollars of bad debt from bank balance sheets and the Securities Exchange Commission’s decision to ban short-selling on select financial stocks, lifted spirits for the stock markets, across the globe.

The volatile week saw the Dow Jones Industrial Average tumbling 504 points on Monday and recovering to end with a sharp rally on Friday. The blue-chip Dow Jones Industrial Average fell 0.29 per cent on the week after big rallies on Thursday and Friday recouped heavy losses earlier in the week. The broad-market S&P-500 index rose 0.27 per cent and the Nasdaq composite managed a gain of 0.56 per cent.

It was a roller-coaster ride for the domestic market as well. Thanks to global developments, the BSE Sensex rebounded from early sharp losses to end with a gain of 0.3 per cent and the NSE’s S&P CNX Nifty by 0.4 per cent.

Though all the ADRs witnessed sharp recovery from week’s low point, only a select ended on positive note.

Bank positions

ICICI Bank was the most volatile among them. While it touched its 52-week low at $22.1301, the ADR bounced back to close at $27.99, still a drop of more than 6.2 per cent over the previous week’s close of $29.85.

The stock has been hit by worries that the bank’s exposure to Lehman Brothers debt may hurt profits. The bank had clarified that it had exposure to the tune of $81 million in Lehman’s senior bonds, and would increase its provision on the debt by about $28 million to cover half of that exposure. Besides, rumours of bank’s top management offloading stake also affected the sentiment for the counter. However, the bank later said that that its top management had not sold the bank’s shares.

The ADR of HDFC Bank, however, managed to end in green at $90.7 ($87.5).

Tech performance

IT counters ended on mixed note. While Satyam Computer and Patni Computer ended on a negative note, Wipro and Infosys Technologies managed to end in the green. IT firms, which earn a key part of their revenues from the US banking and financial services sector, have been at the receiving end, following the financial trouble in the US.

The weakening commodity cycle affected Sterlite Industries, whose ADR ended at $10.11 ($11), a fall of 8 per cent over the week.

However, Tata Motors and Tata Communications finished the week with handsome gains at $9.81 ($9.25) and $20.88 ($18.99).

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