GDR market less volatile

MUMBAI, March 7: It has once again been proved that domestic stock markets are much more volatile than the GDR market where shares of Indian...

MUMBAI, March 7: It has once again been proved that domestic stock markets are much more volatile than the GDR market where shares of Indian companies are listed. While the Sensex jumped by nearly 4 per cent to 3708.58 in the previous week, the Skindia GDR index showed a small fall of 0.64 per cent to 936.60. 8220;This proves that there was big speculative build up in the domestic markets. The stock movement in India was not based on fundamentals,8221; said a top institutional broker, adding that fundamental factors were often ignored in domestic markets.

In fact, Sensex rose by 150 points on Monday March 2, fell by 126 points on Tuesday and shot up by 98 points again on Wednesday. 8220;The hopes of a stable government which were later belied, saw indices take a roller-coaster ride during the week,8221; he said.

According to a study by Skindia Finance, on an average 65 GDRs listed on overseas bourses rose by 1.33 per cent during the bygone week. However, prices of their underlying shares shot up by 7.09 per centin the Indian stock markets.

Significantly, as the domestic markets raced ahead of the international markets, the average premium over the domestic price for 65 GDRs declined from 30.95 per cent February 26 to 24.23 per cent March 5.

GDRs and shares from the aluminium and textile industries excelled during the week. Aluminium stocks moved up 22.54 per cent and 11.66 per cent and textile stocks by 4.69 per cent and 10.94 per cent in the international and domestic markets respectively. While no industry lost in the underlying shares, GDRs of cement firms showed a 5.88 per cent loss. Surprised by India Cement8217;s 72 per cent premium open offer for Raasi Cement, the ICL share witnessed a volatility of 8.94 per cent. The share price moved in a band of 18.30 per cent to close at Rs 57.45. Volumes surged on the BSE during the week from Rs 0.10 crore to Rs 0.21 crore. But the offer had an adverse impact on its GDR which lost 11.76 per cent to 1.50.

The Sterlite bid for Indal was also in the spotlight.Their volumes mounted extensively from Rs 0.02 crore to Rs 0.59 crore for Indal and Rs 4.92 crore to Rs 16 crore for Sterlite. While Sterlite share gained 28.15 per cent to Rs 216.90, Indal share price shot up 55.89 per cent to Rs 113.10. Their GDRs gained by 62.50 per cent to 6 and 33.33 per cent to 3.25 respectively. Rumours of foreign companies picking stake in Videocon International and Arvind Mills resulted in their share prices rising sharply by 38.48 per cent and 19.23 per cent respectively. However, the rumours had no impact on their GDR prices which remained unchanged at 1 and 1.63.