Indian ADRs cheer reforms

Top ADRs gain between 2 and 12 per cent, while Dow climbs just 0.4 per cent

American depository receipts (ADRs) of Indian companies took wing on the New York Stock Exchange on Friday following the big bang reform measures announced by the Union government. Major Indian ADRs rose between two and 12 per cent in New York after the announcements on foreign direct investment (FDI) in key sectors such as retail and aviation. Rediff.com was the top gainer with 11.89 per cent.

Heavyweights such as ICICI Bank Ltd, Tata Motors Ltd and Sterlite Industries Ltd were big gainers between five and eight per cent, signalling another big day on Monday when the local markets reopen. Among the majors, Infosys ADRs rose the least at 1.73 per cent.

These gains were higher than that registered by the broader US markets. The Dow Jones industrial average ended up 53.51 points, or 0.40 percent, to 13,593.37.

The Dow and the S&P 500 both closed at their highest levels since December 2007, while the Nasdaq ended at the highest since November 2000. The small-cap Russell 2000 index closed at the highest since April 2011.
 

BRIGHTENING PROSPECTS
Name	14-Sep	15-Sep	% change
Rediff.Com India-ADR	3.87	4.33	11.89
Sterlite Ind-ADR	7.13	7.68	7.71
Tata Motors-Spon ADR	23.96	25.41	6.05
Icici Bank-Spon ADR	36.38	38.19	4.98
Wipro-ADR	8.67	8.99	3.69
hdfc Bank-ADR	36.17	37.14	2.68
Igate Computer Systems	18.62	19.10	2.58
Infosys-SP ADR	47.33	48.15	1.73
Tata Communications-ADR	8.84	8.99	1.70
Mahanagar Telephone-ADR	1.45	1.47	1.38
Sify Technologies-Spon ADR	2.60	2.62	0.77
wns Holdings-ADR	10.58	10.43	-1.42
Dr Reddy's Lab-ADR	32.58	31.83	-2.30
Closing at 1:30 am IST; compiled by bs research bureau                Source: Bloomberg

US equities are in a run-up that has pushed the S&P 500 to end higher for four consecutive months, according to a Reuters report. The extended advance has come mainly from actions by Europe’s and the US’ central banks to keep interest rates low and stimulate their struggling economies.

The reform measures such as FDI in retail and aviation had been stalled for over a year as the government was unable to push through reforms. However, it has announced a series of measures cheering the markets and lifting the overall business mood.

In India, the decisions to allow FDI and the hike in diesel prices have been welcomed by analysts and industry bodies. Pankaj Renjhen, managing director-retail services, Jones Lang LaSalle India, said: “The decision by the government to allow FDI in multi-brand retail is understandably the talk of the town. There are various points of view regarding the impact it will have on the retail sector in specific and the Indian economy in general, but the decision is a big step in the direction of strengthening organised retail in the country.”

R Balakrishnan, a Chennai-based investment advisor, said: “The measures are good. Retail needs huge investments. No Indian company has that kind of capacity. Some professions may go out of business. But overall, it is good for the common man as the goods will become cheaper.”

Experts said the government step to allow FDI in television distribution platforms will help companies operating in the segment. Edelweiss analysts said in a note: “Indian government has approved hike in FDI for all TV distribution platforms from 49 per cent to 74 per cent. This will provide a huge boost to digitisation. Now, the FDI cap will be uniform across various platforms like DTH, cable, Head-end In The Sky and mobile TV.”