The Hindu Business Line : Banking counters, Tata Motors plummet

Both the US and the domestic Indian markets slipped last week. The Federal Reserve Chairman, Mr Ben S. Bernanke's comment that inflation remains his main concern and a fear that a housing slump will spread beyond the sub-prime borrowers pushed the US markets down.

The S&P 500 slipped 1.1 per cent to 1,420.86 last week while the Dow industrials fell one per cent to 12,354.35 and the Nasdaq Composite Index 1.1 per cent to 2,421.64.

On the other hand, the domestic markets were volatile, beginning the week on a tumultuous note but later recovering most of the losses on the back of FII buying. Week-on-week, the BSE Sensex shed 1.61 per cent while the NSE's S&P CNX Nifty lost 1.02 per cent.

Among the ADRs, banking counters - ICICI Bank and HDFC Bank - and Tata Motors were the worst hit in reaction to the Reserve Bank of India's liquidity tightening move.

On Friday, during post-market hours, the RBI raised short-term lending rate, the repo rate, by 25 basis points to 7.75 per cent and the cash reserve ratio by half a percentage point. While HDFC Bank plummeted by 8.6 per cent week-on-week, ICICI Bank and Tata Motors dwindled by around 10 per cent.

IT counters were also at the receiving end on concern over slowdown in the US economy. Infosys, after dipping below the psychological $50-mark to touch an intra-week low of $49, closed at $50.25, a drop of 4.8 per cent over the previous week close of $52.77.

The fall was even bigger in the case of Wipro (5.9 per cent), though Satyam (1.2 per cent) and Patni Computers (0.6 per cent) relatively managed to withstand the onslaught.

The lone gainers were MTNL and Dr Reddy's Lab. While the latter climbed four per cent, the former gained 1.21 per cent on the back of value buying, despite adverse conditions all around.

Apart from these two counters, Sify at $8.63 ($8.64) and Rediff.com $16.67 ($16.69) remained stable.

On the premium front, only Wipro and Patni Computers were able to widen their premium with respective to their underlying while others saw sharp decline. The ADR of ICICI Bank, which was trading almost on par with the underlying stock, has now slipped into a discount of 6.36 per cent (-0.48 per cent).

More Stories on : Commentary | ADR Watch

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
52 sugar cos offer 1,061 m litres of ethanol to oil firms

Interest bugbear haunts the bourses

Index funds - nothing beyond Sensex, Nifty

RBI has a tough task on hand

Banking counters, Tata Motors plummet

Mumbai University plans BSE listing

Sentiment turns uneasy