The Hindu Business Line : ICICI Bank plunges 20%

Equities suffered across the globe last week due to weak cues from the US. The US stocks declined to the lowest prices since 2006, following reports of record home foreclosures and an unexpected drop in payrolls. The S&P 500 retreated 2.8 per cent to 1,293.37; according to Bloomberg, it is the lowest close since August 2006. The Dow Jones Industrial Average lost 3 per cent to 11,893.69. The tech-focussed Nasdaq declined 2.6 per cent. Back home, the market witnessed sharp fall on the back of global slow-down. The BSE Sensex – which breached 16K level for the first time after September 17 – plunged 9.12 per cent, while the NSE’s S&P CNX Nifty plummeted 8.65 per cent.

With the global scenario remaining unfavourable to the equities, the Indian ADRs also witnessed sharp fall. The worst affected among them were banking counters – ICICI Bank and HDFC Bank. While the former crashed by 20 per cent, the latter plunged by 14.9 per cent. Disclosure in the Rajya Sabha that ICICI Bank has suffered marked-to-market losses of $264.3 million (about Rs 1,056 crore) on account of exposure to overseas credit derivatives and investments in fixed income assets sent the banking space into a tailspin. Even the clarification from the ICICI Bank management that “these are not sub-prime losses. We do not have any direct exposure to sub-prime market,” failed to lift the sentiment for the counter.

Despite firming up of rupee against the dollar, IT counters too suffered on the back of recession fears. Worst among them was Patni Computers, as the ADR crashed by 13.8 per cent followed by Infosys Technologies (8.4 per cent), Wipro (7.65 per cent) and Satyam Computer (6.9 per cent).

Telecommunication counters – MTNL and VSNL – also suffered heavily with the former declining by 14 per cent and the latter by 11.9 per cent.

While the ADR of Sterlite Industries dwindled by 12.1 per cent, automobile major Tata Motors slumped 11.9 per cent.

However, the least affected among the Indian counters was Dr. Reddy’s Lab, which fell by 2.14 per cent.

There were not much deviations on the premium front, as the underlying stocks on the BSE witnessed same fate. Satyam Computer still commands a premium of about 11.72 per cent against last week’s premium of 15.14 per cent. Majority of the ADRs, however, still remain in discount to their respective underlying close.

More Stories on : Commentary | ADR Watch

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

Stories in this Section
Keeping turmoil out of markets

Have we hit the bottom?

ICICI Bank plunges 20%

Escorts (Rs 100.65): Sell

Day Trading Guide

Market unlikely to shed negative bias