Index Moves Up In Narrow Band

The GDR markets moved in a steady range last week but two floats, Indian Aluminium (Indal) and Indo Rama, moved into the limelight on account of the developments in the local markets.

The Indal scrip moved up from Rs 66.5 on February 12 to close at Rs 82.45 on February 20 at the Bombay Stock Exchange, recording a gain of 23.98 per cent over the week. The upward movements followed the news of Sterlite Industries announcing its interest in acquiring 20 per cent of the equity of Indal. The scrip gained trading interest at both the bourses.

The other scrip which moved into the limelight was Indo Rama which has witnessed hectic trading interest following unloading by foreign institutional investors and domestic institutions. The Indo Rama GDR, however, ruled steady at the London markets last week.

 

The Skindia GDR index fluctuated in a band of 3.24 per cent compared with 2.26 per cent for the BSE Sensex stocks during the week. The 65 GDRs and their underlying shares gained 1.58 per cent and 2.36 per cent respectively.

Contrary to its underlying shares, ITC continued to remain volatile at the GDR markets, and touched a new high of $24.5 on February 17. On the other hand, MTNL's GDR took a beating, losing 1.54 per cent on reports of TRAI spiking the cellular plans of MTNL.

A study of the auto sector carried out by Skindia Finance reveals that a retarded economy, coupled with poor demand, has created potholes for the auto sector. Compared with the annualised returns of -6.07 per cent in the Skindia GDR index, the auto industry recorded a negative growth of 41.6 per cent.

Ashok Leyland fared the worst amongst the auto scrips with its GDR showing a negative annualised return of 71.79 per cent in 1997. Its GDR is currently quoting at a discount of 81.2 per cent to its issue price. Spreads have increased from an average of 11.76 per cent in 1997 to 21.29 per cent in early 1998. The share price has declined marginally.

Bajaj Auto and M&M have shown signs of recovery after having shown negative returns of 11.96 per cent and 12.24 per cent in 1997 respectively.

Bajaj Auto's GDR and underlying share recovered by 1.36 per cent and 0.57 per cent respectively. M&M also followed suit with its GDR and underlying share gaining by 0.5 per cent and 0.42 respectively.