GDR index, Sensex fall by over 2%

The Skindia GDR index lost 2.84 per cent to 1,001.67 and the BSE sensex fell 2.05 per cent to 3569.77 points during the week. As a result of the selling pressure, 64 Indian GDRs lost an average of 4.01 per cent as compared to a fall of 3.70 per cent in their underlying shares.

“Apart from political uncertainty, a major factor which hit the sentiment was the sustained fall of the rupee against the dollar. FIIs normally wait till the currency stabilises before putting in fresh funds. On the other hand, they will benefit by booking profits as they they can take advantage of the strengthening of the rupee,” said a fund manager, adding that the general weakness in other world markets was also reflected in India.

On the corporate front, declining occupancy levels during the first half of the current fiscal has resulted in a decline in net profits for the hotel industry. Indian Hotels reported a 9 per cent fall in its net profit to Rs 46.70 crore as compared to a rise of 15.95 per cent last year. The net profit of East India Hotels also declined 5.29 per cent to Rs 44.92 crore as against a rise of 18.87 per cent in the previous year. Stocks from the hotel industry have experienced average negative returns of 19.60 per cent in the last six months.

During the last one week, the GDR of East India Hotels has fallen 9.36 per cent to $ 14.50 as compared to a fall of 1.31 per cent to Rs 394 in its underlying share while the GDR of Indian Hotels remained unchanged at $ dollar 19.75, its share has fallen 0.34 per cent to Rs 588.

On the Bombay Stock Exchange, many scrips, including Reliance, touched their 52-week lows. Reliance touched the 52-week low of Rs 168.25 on Wednesday, a 3.58 per cent drop over the previous close. In all, 14 A group shares fell to their 52-week lows. Bank stocks also encountered selling pressure.

Meanwhile, the third quarter of 1997 saw a total of 34 non-US companies raise $ 4.9 billion through depository issues. Among the largest public and private offerings were ENI Spa $ 708 million (Italy), followed by Ispat International $ 630 million (the Netherlands) and TV Aztec $ 500 million (Mexico). Trading on US Exchange (NYSE, Nasdaq and AMEX) totalled 3.1 billion depository receipts valued at $ 135 billion which is an increase of 29 per cent and 69 per cent respectively as compared with the third quarter of 1996. Telebras was the most actively traded depository receipt followed by Royal Dutch Petroleum with $ 7590 million and Telefons de Mexico $ 7,469 million.

Low badla on BSE

In spite of the sharp fall in Sensex – 178 points – during the week, the badla charges (interest rate on shares carried forward to next settlement) remained low at around 6 per cent in the first settlement of the new carry forward system on the Bombay Stock Exchange (BSE). According to market circles, this indicates that the market was not in an over-bought position as was widely expected. About 13 scrips have attracted backwardation charges including leading scrips like ITC and SBI.

Significantly, the overall outstanding value of shares recovered smartly from the previous settlement of Rs 144 crore to Rs 173.25 crore. This figure is expected to cross Rs 200 crore shortly, according to M G Damani, president, Bombay Stock Exchange (BSE). On the other hand, UTI reportedly purchased blue chip scrips worth over Rs 250 crore. FIIs reportedly sold shares worth Rs 200 crore during the week. Pivotals like ACC attracted backwardation charge of Rs 3.63 on the weighted average bases, Britannia Rs 1.69, Proctor and Gamble Rs 205.96 (book closure for bonus), EIH Ltd Rs 6.16, Grasim Rs 4.93, Hero Honda Rs 31.42.