With the government clearing the decks for two-way fungibility between domestic shares and American/global depository receipts (ADRs/GDRs) last week, Indian stocks overseas have crashed.
The premium on almost 14 of the 23 stocks that make up the Skindia GDR Index has crashed, resulting in the index losing 9.48 per cent between February 13, when the guidelines were announced, and February 15.
According to figures provided by Instanex Capital, which tracks ADR and GDR indices, the list of GDR losers includes Reliance (premium down 1.74 percentage points to 6.07 per cent over the domestic price), State Bank of India (down 7.93 percentage points to 8.13 per cent), Hindalco (down 7.39 percentage points to 8.32 per cent) and MTNL, which went down 7.74 percentage points to 3.37 per cent. All these led to the decline in the Skindia GDR Index premium, which fell further during the week ended February 15 to close at 7.79 per cent.
The two-way fungibility between ADRs, GDRs and the underlying domestic shares was announced in the last budget. However, the finance ministry notified it only on February 13, and the Reserve Bank of India released the guidelines.
The top depository receipt gainers were SIV Industries, NEPC India and SSI Ltd. The losers were Indian Hotels, Arvind Mills and East India Hotels. The top gainers among domestic shares, with depository receipts floating abroad, were SIV Ind, ICICI Bank and CESC, and the losers were Jain Irrigation, India Cements and Videocon International.
Among the ADRs, Infosys Technologies and ICICI commanded good premiums of 53.37 per cent and 18.36 per cent, respectively.
