Indices Recover Sharply; Bses, Sbi At Record Highs

After months of uncertainty, a clear upward trend has been witnessed in the Indian GDR markets. With the finance ministry announcing sops for the capital markets, the domestic markets and the GDR market indices registered a smart recovery over the past month.

The Skindia GDR index moved up 38.75 per cent since December 5, 1996 (being the strongest ever turnaround for the index since inception) and during the course of last week. With the GDR markets looking up, key GDRs like SBI and BSES touched their all-time high levels and ITC and Mahindra & Mahindra were at 52-week highs. Most of the other GDRs were also actively traded during the past week.

 

In the past month, from December 10, 1996 to January 9, 1997, fund managers and FIIs targetted index stocks which resulted in a sharp rise for the BSE Sensex and the GDR index.

The Skindia GDR index rose 29 per cent in the past 30 days and the Sensex went up by 20.14 per cent in the same period. In comparison, the Skindia GDR index had fallen 10.08 per cent and the Sensex by 8.61 per cent in the previous four weeks (November 10 to Dec 9, 1996).

From November 10 to December 9; only 7 GDRs gained, 46 lost ground and 64 issues declined by 10.8 per cent at an average.

The premium for GDRs was 14.08 per cent during the month and fairly illiquid GDRs like Videocon International, Usha Beltron, Ballarpur Industries, SIV Industries and Oriental Hotels were at the top of the premia list. The trading frequency for these stocks was poor, with Videocon at 15 per cent, Usha Beltron at 17.5 per cent, Ballarpur at 7.5 per cent, SIV at 12.5 per cent, while Oriental did not record trading at all in this period. All these stocks had an average daily turnover of less than Rs 10 lakh on the BSE.

The scenario has changed sharply over the past four weeks, with 57 gainers and 2 losers for GDRs and 61 gainers and 2 losers for the stocks at the local market. Although the average premium came down to 13.27 per cent compared to 14.08 per cent, blue-chip stocks showed a healthy trend by recording higher premiums during the past month.

Three of the top five companies with the average highest premia were blue chips - E I Hotels with 40.18 per cent, Bajaj Auto at 40.70 per cent and State Bank of India at 38.43 per cent.

Their trading frequency in the GDR market was also fairly high, with E I Hotels GDR traded with a 76 per cent frequency, Bajaj Auto at 83.33 per cent and State Bank at 54.76 per cent. They had higher daily turnovers at Rs 65 lakh, Rs 16.53 crore and Rs 99.57 crore respectively.

By January 9, the Skindia GDR index premium rose to 25.19 per cent against 22.64 for the period ended January 2. The top gainers were SIEL, Sterlite and Sanghi Polyester, while the losers included Indo Rama, United Phosphorous and Raymond Woollen.

There is a perception that the Indian GDR markets are likely to remain strong in the coming weeks unless the trend at the local markets changes drastically. It would mean good news in terms of pricing and performance of key GDR offerings. However, there might be a slide at the local markets if the petro hike is announced in the course of the week.