GDR index slumps 10.29 as sanctions trigger panic selling

MUMBAI, May 16: Foreign investors suddenly seem to be wary of Indian shares. Global depository receipts GDRs of Indian shares listed on ov...

MUMBAI, May 16: Foreign investors suddenly seem to be wary of Indian shares. Global depository receipts GDRs of Indian shares listed on overseas stock exchanges like London and Luxembourg fell as foreign investors resorted to sustained selling after the nuclear explosions.

Reflecting the panic selling8217; of the GDR market operators, the Skindia GDR index nosedived by 10.29 per cent to close at 859.33 points on May 14. 8220;Pokhran tremors continued to create a trench in the Indian secondary markets with the negative sentiments trickling down to the GDR markets as well,8221; said an official of a foreign investment firm.

There was uncertainty regarding the kind of sanctions to be imposed on India and its effect on the earnings of companies. As a result, the Skindia GDR index lost 4.28 per cent to 907.55 on May 12 and a further 7.33 per cent to 841.03 on May 13 on account of two more tests. In comparison, BSE sensex lost 77.07 points and 162.37 points. However, the indices recovered by the end of theweek.

During the same period, the Skindia GDR premium index also plunged by 29.51 per cent to close at 13.98 per cent, while the indicative barometer of the price-earning ratio of companies fell by 6.62 per cent to close at 19.71 points.

According to Skindia Finance, 65 GDRs comprising the Skindia GDR index registered an average loss of 4.10 per cent, while their underlying shares fell by 4.76 per cent. Interestingly, about 30.77 per cent of these 65 index based GDRs were quoting at their 52 week lows. Among them were GDRs of pivotals like Indian Hotels at 13.75 on May 13, GDR of Mahindra amp; Mahindra was quoted at 6.40 at May 14 and GDR of VSNL was traded at 11.50 on May 13.

GDRs from telecom, aluminium and autos were among the major losers, losing 11.61 per cent, 11.45 per cent and 9.81 per cent respectively. The textile industry was the only gainer, appreciating 2.40 per cent. Aluminium and cement sectors were the mojor losers in the underlying shares, falling 8.63 per cent and 8.08 per centrespectively. With a rise of 3.16 per cent, the steel sector was the only gainer in the shares.

Although there was a rise in the net profit of Hindalco and Indo-Gulf, the overall performance of the A V Birla group companies has not been very encouraging in the fiscal 1997-98. Indo-Gulf was the star performer with its net profit rising 30.56 per cent. Indo-Gulf GDR was unchanged at 1.35, whereas its share appreciated by 9.88 per cent to Rs 41.15. During the year its GDR remained unchanged while its share registered a rise of 30.62 per cent.

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Hindalco8217;s net profit rose 26.85 per cent to Rs 496.00 crore. The results failed to enthuse the markets, and its GDR and share depreciated 1.23 per cent to 20.00 and 6.84 per cent to Rs 739.00. In the year its GDR has lost 39.34 per cent while its share has declined 27.05 per cent. Indian Rayon8217;s net profit was marginally down by 1.05 per cent at Rs 212.51 crore. Its GDR and share fell 1.71 per cent to 5.75 and 2.30 per cent to Rs 229.80. In the year its GDR andshare have lost 53.85 per cent and 40.30 per cent respectively.

Grasim performed the worst with its net profit falling 16 per cent to Rs 231.00 crore.