Gdr Indices Slide To New Lows

The slide was linked in sentiment with the crash at the domestic markets.

Other factors like the growing political uncertainty, foreign investors awaiting announcements of fresh allocations by funds into the emerging markets and end-of-the-year redemption pressures have affected GDR market sentiments further.

The Skindia GDR index, comprising 22 GDRs, touched an all-time low of 59.22 yesterday. The broader DSP GDR valuation index also fell to a low of 74.65.

A revival for the GDR markets has been ruled out in the short term by market analysts. Several Indian corporates, which were planning GDR offerings by the end of the year, have decided to defer their plans.

 

According to marketmen, the GDR markets are likely to remain weak and the indices could fall further.

The SBI GDR, which was listed on Friday, was quoted at $14.15 in London at 3.30 IST yesterday. The last trade, according to marketmen, was below the issue price, at $14.07 against a closing of Rs 217 levels at the domestic markets.

The SBI GDR had witnessed an appreciation initially on listing.

The markets opened weak and several of the key GDR offerings fell: the top losers being Telco (down 9.6 per cent), Raymond Woollen (-8.30 per cent) and SAIL (-5.64 per cent).

The Skindia GDR index had touched its previous low (61.18) on September 27. The DSP Index had also recorded its previous 52-week low recently, at 76.79 on September 30.

The Skindia index has now lost 11.25 per cent over the fortnight and 13.17 per cent over the past three months. Over a one-year period, the fall in the index is at 27.95 per cent, Skindia sources said.

Of the 62 GDRs, 26 lost ground and 35 remained unchanged. The sole GDR issue which gained ground was Bajaj Auto, up marginally 0.37 per cent to $32.25.

"The GDR markets will continue to remain weak...but foreign investors will also wait and watch the fresh allocation for the emerging markets. In that context, trading activity would remain dull till early January," Amit Ghose of investment bank HSBC James Capel said.

According to Navin Agrawal of Skindia Finance, the Skindia GDR index could slip a further 2-2.5 per cent today on account of weak market conditions.

There is also a fear that major Indian corporates which are planning GDR issues in the coming months will wait until market conditions improve. According to FIIs, by the end of the year the key issues hitting the global markets could be those of Hutchison Max (possible $200 million ADR) and BPL ($200 million ADR).