Index Premia Inch Up To 22.24%

After a prolonged spell of weakening trading sentiment, an element of confidence was witnessed at the GDR market last week. The Skindia GDR Index hasmoved up from 793.85 on January 30, gaining 55.08 points during the week, the highest weekly gain since December 18.

The Skindia GDR Index premium inched up from an average of 18 per cent in January to 22.24 per cent in the first week of February. According to marketsources, the hike in premiums indicate that the GDR market is anticipating that the worst of the corrections is nearly over.

A study to track the co-relation of Skindia GDR Index with other international indices for the calendar year 1997 showed that the Skindia GDR index has a low co-relation with the most tracked indices of the world. On normalising the different indices, namely, Dow Jones, FTSE, Hang Seng and the Skindia GDR Index to a base of 1000 on January 2,1997, the indices were closet on January 16, 1997, when their respective values were 1050.12,1033.06,1047.51 and 1006.40 respectively.

 

Among the three indices, the highest co-relation of the Skindia GDR Index was with Hang Seng Index of 10.10 per cent with a beta of 0.24 followed by Dow Jones with 1.14 per cent (beta 0.18).

Though India GDRs are widely traded on the LSE, Skindia GDR Index showed the lowest co-relation of 0.45 per cent with the FTSE 100 and beta of 0.05.

The low co-relation could be attributed to the diverse nature of the markets, the type of players, liquidity, depth and the rules and regulations governing the markets.

Being the most volatile, the Hang Seng moved in a 150.31 per cent band. This was followed by the Skindia GDR Index and FTSE which moved 64.97 and 60.48 per cent respectively. However, Dow Jones experienced the least volatility, moving in a range of 5.99 per cent.

The top gainers of the week were Hindalco at $18.25, up 15.87 per cent over the pervious close, L&T at $10.75, up 13.16 per cent and VSNL at $13.25, up 12.77 per cent.

Top losers of the week were SAIL at $2.88, down 7.10 per cent over the previous close, Indian Hotels at $16 (down 5.88 per cent) and Ashok Leyland at $2.40 (down four per cent).

In terms of underlying shares, ITC topped the gainers list at Rs 600( up 7.96 per cent), MTNL at Rs 231.25 (up 6.69 per cent), and BSES at Rs 168.10 (up 5.65 per cent).

Top losers included East India Hotels at Rs 291.50 (down 17.07 per cent), Grasim at Rs 277 (down 14.18 per cent) and SIEL at Rs 28.50 (down 10.94 per cent).

In terms of the premium commanded by GDRs to the underlying shares, Oriental Hotels topped the list at Rs 697.50 (dollars converted to rupee terms), a whopping 208.66 per cent difference, Crompton Greaves came next at Rs 77.50 (up 171.93 per cent), while Jain Irrigation was quoting at 107.59 per cent, premium at Rs 29.06.