| Indian ADRs - Ditched Darlings |
The darling is dumped. Yes, Infy, the darling of millions of investors, seems to have lost its glamour and charm for its US patrons. The fellow scrip Sify has been shown the door to debris. Other ADR scrips are languishing in the lurch - courtesy Nasdaq. Though not all of these ADRs are listed on Nasdaq, the impact on Infy affects all and sundry. Hit and wounded by the Nasdaq bullet, the Indian ADRs have been put on a fatal diet by the bear operators in the US markets.
To top it all, what is surprising is not
the fall in these stocks but the character - a sort of trend reversal. At a time when the
tech-laden index was getting recharged on the back of bottom fishing by the bargain
hunting species their Indian ADRs on the other hand wore a dejected look. Sample this:
Infy, the bellwether tech scrip plunged to its 52-week low on a day when the tech-heavy
Nasdaq gained by a hefty 7.5 percent to touch 2517.02, on the Christmas eve. In fact, Infy
has lost around 73 percent since the beginning of the year, when it touched a high of
$375.
The story is no different in case of other Indian ADRs either. Volatility in Nasdaq is
taking a toll on the health of other tech stocks too, which are bleeding after getting
hammered to their 52-week lows. So what lies in store for the breathless Indian tech ADRs?
Barring some upward push here and there, Nasdaq has been seeing new lows with every profit
warning news from US tech companies hitting the ears of already panicked operators. It
looks like more gloomy stuff is waiting to wreck the back of bulls. With the signs of slow
down in the US economy and fear of worst time ahead for the US tech companies, especially
the heavyweights, for Nasdaq which plunged to its 21-month lows recently, finding another
bottom could not be that much difficult. And with Internet startups vanishing like
anything the days of heady valuations are now a thing of the past. And, It is already
showing in the M-cap of the stocks. Infy’s market cap is now down to $12.9 billion
from a high of $40 billion, it touched in the beginning of the year.
In December alone Infy has so far lost away 18 percent since the beginning of the month.
It is currently trading around $95.06. Sify is currently trading around $3.8, well below
its offering price of $4.5. Its M-cap which was at one point of time higher than its
parent company is now languishing around $0.4 mn, a steep fall from $5.4 bn. SLT or
Silverline has lost almost more than 50 percent from its issue price of $25 and is now
trading around its 52-week low of $10.6. Another Indian ADR Rediff is trading around $2.6,
down from its issue price of $12 and an all time high of $30.7, pulling down its M-cap
from an astronomical $700 mn to around $70 mn today. The only saving grace has been Wipro,
which has so far managed to stave off the bear onslaught and is trading around $48.94,
above its all time low of $41.3.
Well, the million dollar, sorry billion dollar question is - Will the lost glory ever
return to Indian beauties, I mean ADRs? We will have to wait for another fashion affair
(investment season which probably peaks up in the beginning of every year) slated for
January 2001.
Amit Singh
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