Indices Hold Ground Despite Virginia House Fallout

This is evident from the fact that during the last fortnight when Sebi further unshackled the capital markets, investigations were carried out against ITC and encouraging half-yearly results were announced, on an average, 59 underlying shares recorded gains or losses compared with the changes in GDRs.

The Skindia GDR index moved in a narrow range from 61.61 on October 24 to 60.23 on October 31.

The Skindia GDR Index premium moved up from 11.54 per cent to 12.18 per cent mainly as the underlying share prices slid during the week, while the GDR prices remained relatively steady.

The GDR markets are expected to remain steady in the coming weeks largely on account of no fresh buying activity and with foreign investor preferring to adopt a wait and watch attitude before making an investment decision.

 

The impact of the investigations/detention of top ITC officials did cause the stock price to fall sharply and GDR prices too fell.

However, there has been no further fall at the GDR markets. Evidence of Fera violations caused the GDR to fall by 7.14 per cent to $9.75 and ITC's share price fell 5.6 per cent on October 30. The next day, however, the GDR prices did not fall so dramatically.

A study carried out by Skindia Finance reveals that improved half-yearly results have had a positive impact on the Reliance GDR, share price and even the Euro-convertible bond.

The GDR gained 9.52 per cent from $10.75 on October 18 to $11.50 on October 31.

The share price in the same period moved up 3.98 per cent to touch Rs 202 while the ECB rose 0.24 per cent to $105.50.

Following the announcement of RIL results, where it posted a Rs 651-crore profit, the GDRs and shares were more volatile than the bond compared to the two weeks prior to the results.

Despite the GDR gaining more than the share and the ECB, on an average, it continued to quote at a discount to both of them.

The average discount for the Reliance GDR to its ECB fell by 11.28 per cent to 40.95 per cent while that of the GDR to its share fell by 58.32 per cent to 1.01 per cent.

In the GDR market, there were 8 gainers, 27 remained unchanged and 28 lost ground while at the underlying share market, there were 7 gainers with 3 remaining unchanged. Fifty-three lost ground.

The top gainers included J K Corp which rose 16.67 per cent, followed by Hindalco which was up 7.77 per cent from $17.63 to $19 and BSES which rose by 2.6 per cent.

The major losers in the GDR markets last week were Crompton Greaves which slipped 18 per cent followed by Sanghi Polyester, down 14.29 per cent and Nippon Denro which also fell by a similar percentage.

At the bourses, BSES, Arvind Mills and the State Bank of India stock were the main gainers, with BSES moving up from Rs 186 to Rs 195 and the State Bank of India stock gaining from Rs 225.75 on October 24 to Rs 230.50 on October 31.

The main losers at the local markets were Himachal Futuristic which fell 18.4 per cent followed by G E Shipping which was down 17.65 per cent and Oriental Hotels which slipped 13.9 per cent.

The premium for Ballarpur Industries GDR was 68.61 per cent while Oriental Hotels was 64.5 per cent, followed by Jain Irrigation.

The top discounts included Tube Investments, EID Parry and NEPC Micon.