The Hindu Business Line : HDFC Bank, ICICI Bank suffer sharply

FOR the second week in a row, the US equities suffered on reports of higher imported goods and consumer prices coupled with comments from the Federal Reserve spurred concern about higher inflation and interest rates.

The Dow Jones Industrial Average ended flat at 10,287.34 while the S&P 500 declined 0.8 per cent at 1186.57 and the tech-focussed Nasdaq tumbled 1.2 per cent at 2064.83.

But the scene at the domestic market was even grimmer as the equities suffered sharp setback on the back of low FII inflow, weak Asian advices and rise in inflation. All-round selling, led by foreign institutional investors, sent the BSE Sensex into tailspin as it dropped by 290 points or 3.4 per cent to 8201.73 while the NSE's S&P CNX Nifty tumbled 3.6 per cent at 2484.40.

Despite handsome performances by corporate majors such as Infosys Technologies and ICICI Bank, none of the ADRs finished in the positive territory.

Worse so, except MTNL, all the other ADRs saw their premium slipping further. This was despite a higher fall in the ADR price as compared to the underlying stock prices' decline. This could be due to the fall in rupee value vis-à-vis US dollar.

Dr. Reddy's Laboratories announced that it received approval from the US Food and Drug Administration to sell its copy of Sanofi-Aventis's diabetes drug Amaryl in the US. But the ADR slipped to $19.66 against the previous week close of $20.97.

Infosys Technologies turned in an impressive show for the quarter ended September 30, 2005 beating market expectations. It said its second-quarter profit rose 36 per cent as the company won more overseas orders. But the ADR saw its value declining to $71.02 ($72.13).

Satyam Computer, which is scheduled to announce its Q2 numbers on October 20, also declined to $29.56 (30.81), a fall of four per cent. The company announced that it entered into marketing and sales agreement with IONA(R) Technologies, a world leader in high-performance integration solutions for mission-critical IT environments.

The other IT major Wipro Technologies also declined to $10.15 ($10.39).

But the top losers were HDFC Bank, VSNL and ICICI Bank.

ICICI Bank also reported better-than-expected second-quarter profit; the bank's profit rose 31 per cent to Rs 580 crore. But it plans to sell Rs 7,000 crore worth shares (either equities or ADRs) seemed to have affected the sentiment for the counter on fear of widening equity base.

The HDFC Bank ADR declined nine per cent to $46.21 ($50.79) while VSNL ADR tumbled 7.7 per cent to $14.12 ($15.3).

The premium of HDFC Bank ADR also declined to 4.94 per cent against the previous week level of 10.38 per cent.

Internet counters Sify and Rediff.com also closed weak at $5.03 ($5.48) and $13.85 ($15.64) respectively.

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HDFC Bank, ICICI Bank suffer sharply — Price, premium fall for all