Financials, auto stocks do creditably; tech frustrates; Rediff.com worst performer, followed by Sify Technologies
NEW YORK: Indian companies’ stock performance has been mixed in the U.S. stock exchanges in 2012 until December 24th. The technology sector took a beating owing to the slowdown in spending, while financial and automobiles performed creditably despite uncertain economic conditions threatening to play spoilsport.
Most of the stocks, including the technology sector, performed well in the first and third quarters. However, profit taking and combination of negative sentiments hurt sentiments in the second quarter, whereas the uncertainty over the fiscal cliff is upsetting any gains in the fourth quarter.
Technology bellwether Infosys, considered once the darling of investors, lost investors’ favor as it performed poorly in 2012, plummeting 23.7 percent or $13.05 so far. In terms of percentage, Rediff.com is the worst performer with a loss of 61.3 percent or $4.67 followed by Sify Technologies that shed $2.02 or 50.3 percent. Wipro too dropped 14.5 percent or $1.48 as a result of weakness prevailing in the sector. Tata Communications, which was earlier known as Videsh Sanchar Nigam Ltd., managed a slender gain of 0.8 percent or a mere 6 cents.
Though the technology companies disclosed that they did not witness cancellation of orders, everyone was unanimous about the ambiguity in the sector and delay in taking a decision making Indian IT companies to often reduce their earnings outlook for the fiscal year ending March 2013. However, Cognizant Technology Solutions bucked the trend to post a gain of 14.1 percent or $9.04.
Similarly, the major indices in the U.S. have advanced so far in the current year. For instance, S&P 500 edged up by 13.4 percent, while the NASDAQ gained 15.6 percent and the Dow Jones Industrial Averages was up by 7.5 percent. It’s quite clear that barring Cognizant Technology, other tech companies from India have lost investor confidence.
However, some other sectors performed well. Financial stocks, ICICI Bank and HDFC Bank, in particular posted a gain of 67.3 percent or $17.78 and 55.5 percent or $14.58 respectively. This is higher than Citigroup’s advancement of 49.7 percent or $13.07 and JPMorgan Chase’s gain of 32.1 percent or $10.67 percent. Investors fancied financial stocks generally in 2012 after it suffered the worst following the financial turmoil in 2008 and the Lehman Brothers fiasco.
Similarly, Tata Motors recorded 65.2 percent or $11.01 gain in the automobile sector. The company’s Jaguar and Land Rover are driving its stock higher despite sluggishness back home in India. In terms of percentage, the Tata Motors’ stock was the leader, while in terms of USD; Japan-based Toyota Motors earned the pride of adding $25.05 or 37.9 percent. The American-based automobile companies’ stocks also found favor with investors following the upbeat sales witnessed so far due to lower interest and replacement of age-old vehicles. While General Motors advanced 36.5 percent or $7.39, Ford Motors edged up by 15.2 percent or 1.64.
There was only one telecom stock from India to be traded in the U.S. stock exchange: Mahanagar Telephone Nigam Ltd. The stock price is less than $1 making the comparison redundant.
In the pharma sector, Dr. Reddy’s Laboratories moved up 12.7 percent or $3.75, whereas Sterlite Industries’ stock grew 22.8 percent or $1.58 in the metal and mining sector so far. WNS (Holdings), a business process outsourcing company, also gained 17.3 percent, which is higher than S&P 500 and Dow.
The auto sector is likely to extend its gain in 2013 too due to lower interest rates in the U.S., which is expected to prevail at least in the first half. However, technology will continue to bear the brunt of the slowdown in spending. Financial and Pharma sectors too could see some gain as the credit crisis is likely to ease in the European Region. Yet, come, January 1, the decision over the fiscal cliff will decide the direction of stock performance.