Date:21/06/2004 URL: http://www.thehindubusinessline.com/2004/06/21/stories/2004062101770400.htm

Back Infosys price, premium jump

K.S. Badri Narayanan

THE US market closed last week on a mixed note amid low volumes as many investors preferred to wait ahead of this week data on durable goods orders, new home sales and consumer sentiment for clues about the direction of the economy. Last week, the Dow Jones Industrial Average gained 0.1 per cent to 10,416.41, the tech-laced Nasdaq Composite Index slipped 0.7 per cent to 1986.73 while the S&P-500 lost 0.1 per cent.

The domestic markets suffered a sharp setback, led by pharma stocks, pulling down the BSE Sensex by 1.30 per cent to below the psychological 4800-mark on sustained selling pressure following a sharp rise in inflation figures. On the NSE, the S&P CNX Nifty dropped 1.14 per cent.

Moving on to the ADRs, except Infosys Technologies and Wipro, all the other counters closed the week in negative territory. Infosys was the only counter that saw a noticeable appreciation in value at $87.95 against the previous week close of $84.52, while Wipro closed the week flat at $44.70 ($44.27).

Infosys announced that it will set up a software development centre in the Czech Republic to service customers in Germany and other European nations. It also announced the setting up of a training centre in Mysore.

Indian pharma counters have been declining of late on expectation of slower growth. Besides, CLSA announcement that it had cut its recommendation on Indian drug companies such as Ranbaxy and Dr. Reddy's Lab on slower growth seemed to have further affected the sentiment. Dr. Reddy's Lab fell to $18 ($18.85).

Banking counters - HDFC Bank and ICICI Bank - slipped sharply on fears that the UPA Government may ask the bankers to offer cheap credit to farmers. HDFC Bank closed lower at $28.42 ($29.46) ICICI Bank at $12.5 ($13.13).

MTNL, which declared a dividend of Rs 4.5 per share, also closed on weak note at $666 ($6.75).

Internet majors - Sify and Rediff.com - also witnessed sharp erosion in values at $6.21 ($6.74) and $7.76 ($8.58) respectively. Rediff.com India, in fact, announced the launch of Rediffmail 1GB effective 2000 hours IST, giving virtually unlimited storage space of one gigabyte to all its free email users in India and worldwide. With immediate effect, Rediffmail users will also be able to send in a single email a message of size up to 10 megabytes. But it's largesse did not have any positive impact on the ADR price movement.

On the premium front, it's once again Infosys, which scored over its peers. While others moved in the same range as in the previous week, Infosys' premium jumped to 52.58 per cent (44.54 per cent).