Gdrs Firm Up On Rumours Of Badla Return

According to reports the ITC GDR, which witnessed a 20 per cent fall over the fortnight, remained steady while trading at the London markets yesterday. The bid price for the ITC GDR stood at $7.75 while the offer price was $8.50, which were the closing levels for the GDR on Wednesday.

Key GDR indices have not lost ground and have in fact gained marginally.

The Skindia GDR index rose to 59.78 on November 6, up 1.72 per cent over the previous close of 58.77 on November 5. The broader DSP GDR valuation index has in the same period moved up from 74.30 to 74.97, up 0.90 per cent. Premium for Indian GDRs rose from 13.59 per cent to 16.13 per cent on November 6.

 

While the ITC stock yesterday recovered lost ground on the local markets on account of short covering, the GDR remained steady. Further selling pressure may now not be witnessed with prices of several GDRs already ruling at lower levels.

According to market circles, there were rumours that Sebi discussed the badla issue at its recent board meeting. However, Sebi chairman D R Mehta has categorically denied this.

According to Navin Agrawal, Skindia Finance, certain fundamentally strong GDRs from Indian corporates may witness a dip in prices largely on account of profit-taking.

Some stocks may also witness a change in trends on account of a shift in portfolio, with foreign institutional investors (FIIs) picking up the domestic stock and selling the GDR.

These could include Bajaj Auto, Reliance and possibly Grasim, with the Bajaj Auto GDR up to $34.25 against a previous level of $33, and trading at a 34 per cent premium over the underlying share.

In a marginal upswing, the Reliance GDR gained substantially by 7 per cent from $10.75 to $11.50. GDRs where the premium is unrealistically higher could also witness a slide. Marketmen, however, felt that GDRs of Jain Irrigation and Videocon International, which were ruling at high premiums of 52.90 per cent and 43.86 per cent respectively, may remain steady as there is little buying interest in these stocks at the local markets.

According to a UK-based investment bank, the local markets may have bottomed out and a further downward trend is not likely to come about.

The domestic markets witnessed a marginal upswing, with the BSE Sensitive Index moving up 22.50 points to close at 3066.66, due to short covering as the BSE will remain closed in the coming days on account of the festive season.