IT counters suffer most

Amid fears of recession following weak economic data – increase in unemployment to a two-year high and decline in manufacturing, the US stocks slumped to five month low. The first week of the New Year started on disastrous note, as the S&P 500 retreated 4.5 per cent to 1,411.63 last week – the steepest fall in five months. The Dow Jones Industrial Average slumped 4.2 per cent to 12,800.18. That brought its loss since December 31 to 3.5 per cent, the worst first three days of any year since 1904, according to Bloomberg data. The Nasdaq Composite Index declined 6.4 per cent to 2,504.65, the lowest since April.

Indian market

In contrast, the domestic benchmarks – the BSE Sensex and the NSE’s S&P CNX Nifty – witnessed sharp surge and registered their new peaks. Expectation of good third quarter performance from Indian Inc and the ensuing Reliance Power IPO ensured that the bullish momentum sustains.

The BSE Sensex closed at a record high of 20,686.89, a gain of 2.38 per cent over last weekend’s close of 20,206.95, while the NSE’s S&P CNX Nifty soared 2.21 per cent to end the week at an all-time high of 6,274.30 from previous weekend’s close of 6,079.70.

It was mixed show by Indian ADRs.

IT turns weak

Information technology stocks were worst performers. Indian software majors, which depend mainly on the US, were affected following the weak US economic data. Besides, fears of cut in IT budget by US Inc and appreciation of rupee against the greenback, also turned the sentiment weak for the IT majors.

Satyam Computer was the biggest loser by 11.66 per cent at $24.02 ($27.19) followed by Wipro which fell 10 per cent at $13.66 ($15.18). Infosys and Patni Computers slipped by 7.5 per cent and 6 per cent respectively. Infosys is scheduled to announce its Q3 numbers on January 11 that could set trend for the IT companies.

MTNL – the star

Even with the counters witnessing severe selling pressure, MTNL jumped about 11 per cent at $10.25 ($9.24) after registering its new peak at $10.75 during intra-week tradings.

Tata Motors also ended on positive note; it gained 4.4 per cent at $19.32 ($18.5). Ford Motor last week named Tata Motors as the preferred buyer for Jaguar and Land Rover.

Another counter that bucked the trend was Sterlite Industries, which gained marginally by 0.15 per cent, on account of firm metal prices.

HDFC Bank and ICICI Bank displayed a divergent trend at the US bourses. While the former slumped 7.7 per cent, the latter finished a tad better by 0.26 per cent.

Dr. Reddy’s Lab, Rediff.com and Sify also finished in the red.

Premium declines

The divergent trend of the Indian and the US bourses also reflected in the premium/discount of Indian ADRs. While discount widened for the counters that were trading in discount last week, the premium tumbled for those trading in premium.