The Indian GDR markets continued to gain ground last week, led by the sharp upswing at the domestic markets. With key stocks like Reliance, Telco and SBI moving up sharply due to several factors, the GDRs of these stocks also continued to move upwards.
By the end of the week, the finance ministry announced further norms to liberalise the economy keeping in mind the need for full capital account convertibility.
The ministry has now said that not only would the clearance for GDR offerings be streamlined but also up to 50 per cent of the money raised through a GDR offering could be used for investments in joint ventures abroad or investments in wholly-owned subsidiaries.
While the line up from corporates for GDR offerings has been slow, the GDR markets will witness the entry of fundamentally strong Indian corporates, particularly PSU offerings, through large sized issues.
By the end of last week, the Skindia GDR Index came within striking distance of its new 52-week high of 84.53 (19 June 1996), closing at 82.50 on June 19.
The Bombay Stock Exchange Sensex, during the course of the week, touched its 52-week high of 4148.86 on June 18 and with the rally sustaining till the end of the week, marketmen are of the view that the GDR markets will continue to show an upward trend.
The Skindia GDR Index premium touched an all-time high last week, with the average premium for the 64 GDRs touching 33.24 per cent. The 64 GDRs gained on an average 1.19 per cent compared with 2.61 per cent for the underlying shares.
During the week, stocks from the cement sector were in the limelight with their GDRs gaining ground by an average 16.22 per cent. The Reliance stock and the GDR gained ground last week touching new highs following reports of the board of directors meeting this week to consider the issuance of bonus shares.
The Reliance GDR touched its new 52-week high at $23.13 and the stock also moved to its new high of Rs 343 during intra-day trading. Greater trading interest in the RIL stock was generated through foreign institutional interest at the GDR markets, with a decline in the spreads between the bid and offer prices from 1.11 per cent on June 18 to 1.09 per cent on June 19.
Turnover at the local markets moved up 103 per cent, according to the Skindia GDR monitor.
The key gainers at the GDR markets were India Cements (30 per cent), E I Hotels (10.2 per cent), Mahindra & Mahindra (8.9 per cent). The main losers were Videocon Intl (down 15.7 per cent), Bombay Dyeing (down 7.6 per cent) and Arvind Mills (down 7.4 per cent).
The Skindia GDR Index has gained 14.2 per cent over the past 30 days while the BSE Sensex has gained 8.52 per cent in the same period.
