Infosys, Wipro gain on hopes of attracting Satyam clients.

K.S. Badri Narayanan

The weak job loss report and announcements by corporates, including Wal-Mart, projecting lower profits, sent US stocks down. The Dow Jones Industrial Average lost 4.82 per cent to 8599.18 and the S&P 500 Index fell 4.45 per cent while the Nasdaq Composite displayed relatively better show by tumbling 3.71 per cent.

The Satyam Computer scandal spoiled the New Year party for the domestic bourses. Following the dramatic event at Satyam, the BSE tumbled 5.54 per cent while the NSE’s Nifty fell by 5.70 per cent.

Satyam saga

The NYSE has suspended trading on Satyam Computer after the “fraud” came to light on January 7. The NYSE had halted trading in Satyam Computer after the ADR tumbled over 90 per cent in pre-market trading on the bourses. In a statement, the NYSE had said: “NYSE is currently evaluating the news relating to Satyam and will closely monitor further developments. The security will remain halted until further notice.”

Now there are indications that NYSE may resume trading on Satyam on Monday.

However, the Satyam issue did not affect the other IT major, Infosys Technologies, which gained about 5.2 per cent in the US market. Wipro ADR also showed relatively better performance as the ADR slipped by about 2.3 per cent at $8.2 ($8.39). Hopes that several clients of the beleaguered IT firm may shift to Infosys, Wipro and TCS helped these counters do well at the bourses

Sify suffers

The ADR of Sify, which was earlier part of Satyam group, was the worst affected among Indian counters. The ADR plummeted 34 per cent to $1 against the previous week close of $1.52 though there is no connection between Satyam and Sify currently. Satyam had sold its entire stake to Infinity Capital Ventures, LP, in 2005 itself.

However, the other Internet firm, Rediff.com, ended on a positive note at $2.28 ($2.04).

Banking majors were also at the receiving end as HDFC Bank tumbled by 11 per cent and ICICI Bank crashed by 9 per cent.

The counter to witness sharp slide was MTNL, whose ADR dwindled by 12 per cent at $3.15 ($3.58) while Tata Communications slipped 5 per cent at $20.53 ($21.6).

Sterlite Industries and Tata Motors, however, ended the week on positive note at $5.78 ($5.62) and $4.76 ($4.74) respectively.

Dr. Reddy’s Lab, on the other hand, fell 5.7 per cent at $9.63 ($10.21).

(This article was published in the Business Line print edition dated January 12, 2009)
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