Uncertainties Discounted By Fund Managers

The Skindia GDR Index witnessed volatility of 2.32 per cent during the period between August to November as compared with 1.76 per cent in the first half of 1997. A reverse trend was observed in the volatility of the BSE Sensex which declined to 1.41 per cent as compared to 3.64 per cent during the same period.

Of the 20 securities comprising the Skindia GDR Index, Reliance, Indian Rayon and Bajaj Auto were the most volatile in the GDRs as well as the underlying shares . Reliance had a volatility of 5.95 per cent in the GDR and 3.35 per cent in its underlying share, Indian Rayon 5.29 per cent and 3.64 per cent and Bajaj Auto 4.31 per cent and 4.09 per cent respectively.

Clouds over MTNL's $358.74 million(1 GDR-2 shares) issue finally dispersed when it was priced at $11.958, a premium of 4.29 per cent to its 10-day average domestic price of Rs 225.50. Trading on the London Stock Exchange at $13.45(December 4), a premium of 18.33 per cent over its domestic price of Rs 221.50 reflected institutional demand for the scrip. The decision on exercising the greenshoe option of 10 million shares(Rs 233.58 crore) will be finalised in the coming week..

The GDR market seems to have immunised itself to the ensuing political and currency upheavals as 40 GDRs remained unchanged. Both the Skindia GDR Index and the BSE Sensex have moved in a narrow band of 1.2 per cent since December 1. The President's decision on December 4 to dissolve the Lok Sabha and call for fresh elections seemed to have been discounted by fund managers abroad with the GDR markets losing a marginal 0.46 per cent. The success of MTNL's GDR issue was the only highlight in the otherwise dull market.

In the period under review, there were 15 gainers and 27 losers while 22 remained unchanged. In terms of underlying shares , the list comprised 13 gainers, 49 losers and 2 unchanged. The top gainers among the GDRs were Grasim at $11, up 20.48 per cent, SBI at $16 (+14.29%) and ITC at $18(+9.09%).

Major losers included Indo Rama at $3 (-40%), United Phosphorous at $3.50(-30%) and GNFC at $2(-27.27%).

In case of underlying shares, the top three gainers were NEPC India which ended the week at Rs 3.95 (+19.70%), Videocon International at Rs 32 (+12.28 %) and Siel at Rs 30.75 (+9.82%).

Top losers included SAIL at Rs 10.25 (-25.45%), JK Corp at Rs 15.75 (-23.54 per cent) and CESC at Rs 25.25 (-19.84 per cent).

In terms of premium , the Crompton Greaves GDR topped the list at Rs 87.59 (dollar converted to rupee terms), commanding a premium of 243.5 per cent to its underlying shares. Oriental Hotels came next at Rs 700.74 (+159.53%) while NEPC was third at Rs 9.73(+146.39%).

Indo Rama topped the table of GDRs trading at a discount of 31.86 per cent at Rs 11.68 (dollar converted to rupee terms). JCT Ltd at Rs 4.87 was quoting at a 31.52 per cent discount while GNFC at Rs 15.57 was available at a discount of 26.83 per cent.