MUMBAI, Feb 14: Amidst political fever a dull week was witnessed in the GDR market. Even Moody's have put on hold the review of India's sovereign rating till after the elections. Under these fluid situations, FIIs continued to lie low and are awaiting the outcome of the forthcoming elections.The lack of commitment was apparent as 65 GDRs gained marginally by 0.26 per cent. After an initial gain of 2.64 per cent on February 9, the Skindia GDR Index has shed 25.21 points during the week. Only ITC stole the show by touching its 52-week high at $ 22 on February 12.
In 1997, compared to an average gain of 0.04 per cent in the Skindia GDR Index, GDRs from the aluminium sector fared badly declining by 0.12 per cent on an average. This year witnessed a similar trend with these GDRs declining by 0.28 per cent compared to a fall of 0.24 per cent in Skindia GDR Index.
Their underlying shares have already lost 0.53 per cent compared to a fall of 0.37 per cent in the BSE Sensex. Depressed demands especially fromAsian regions which accounts for 30 per cent of the total global consumption may hinder signs of revival in this sector.
In spite of impressive results posted by Hindalco, the Aditya Birla group's flagship company, in the first half of 1997-98, its GDR has fallen by an average of 0.06 per cent in 1997 and 0.20 per cent in 1998. Its GDR which touched its 52-week low of $ 15 on January 27 is currently quoting at a premium of 16.60 per cent to its underlying shares. Indian Aluminium has suffered a similar fate. Its underlying shares and GDR have witnessed negative returns of 0.40 per cent and 0.36 per cent respectively in 1998.
Currently its GDR is quoting at a discount of 70.46 per cent to its issue price.
The Disinvestment Commission recommended that the pricing achieved through the issue of GDRs should be the benchmark for the domestic market. It suggested that the domestic price should be at a 10 per cent discount of the GDR price.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
