Indian ADRs drop 7% on global turmoil

The post-Budget sell-off continued on the overseas equity markets with prices of American depository receipts (ADR) of Indian companies listed on the Nasdaq and the New York Stock Exchange (NYSE) falling by over 7 per cent in just three trading days after the Union Budget on February 29.

The ADRs/GDRs of Indian banks suffered the most, with the GDR of the largest public sector bank, State bank of India, declining by 9.73 per cent in three days. The other big losers were HDFC Bank, down 8.47 per cent, and ICICI Bank, down 6.68 per cent during the same period.

The ADRs/GDRs of software companies dropped significantly with the ADR of Satyam Computer dipping 7.87 per cent from $26.67 to $24.57. The ADR of Infosys Technologies declined by 6.62 per cent to $38.21 and the ADR of Wipro fell by 3.35 per cent to $11.54.

The Instanex Skindia DR Index, which tracks the price movement of major ADRs/GDRs, has declined 7.15 per cent to 2,843.12 on March 3 from 3,062.21 on February 28.

Among other overseas listed firms were Larsen & Toubro, down 8.31 per cent at $84.35, Reliance Industries down 9.13 per cent at $116.08 and MTNL down 5.25 per cent at $5.78.

The ADRs and GDRs (global depository receipts) of Indian companies have been underperforming on the overseas exchanges since the last two months on weak global markets.

The weakness in the global markets saw the premium of most ADRs and GDRs vanishing, with the ADR of Infosys Technologies trading almost at par with its Indian shares compared with 25-40 per cent premium a year ago.

ADRs that were trading at a premium in good times are currently trading at a discount of over 5 per cent. The ADR of ICICI Bank and the GDR of Hindalco were trading at a discount of 5 per cent each as against a marginal discount of around 1 per cent each a month ago.

The recent fall in market prices of Indian shares saw the ADR/GDR prices of ICICI Bank, HDFC Bank, MTNL, Wipro, Dr Reddy's Lab, Rediff.com and Satyam Infoway declining over 20 per cent each.