MUMBAI, December 27: In the last few trading sessions, the sharp recovery on the GDR and local markets have been a welcome Christmas gift for the investors. The indices continued their uptrend with the Skindia GDR index and BSE sensex gaining 11.63 per cent, and 8.37 per cent respectively as compared to the last fortnight.During the calender 1997, two of India's largest GDR issues were launched. Both VSNL and MTNL raised a total of $ 885.29 million. The newly consituted Skindia GDR Index saw sharp fluctuations, and moved in a wide band of 64.97 per cent as compared to 41.01 per cent on the BSE Sensex.The Skindia GDR Index premium has considerably declined, since it peaked to 33.35 per cent on June 13. On an average, only 16 GDRs were trading at a premium to their issue price in all four quarters with Mahindra and Mahindra, Hindalco, E I Hotels and ITC commanding the highest premiums.Widening spreads indicating declining liquidity was witnessed in the last two quarters. Average spread for 64 GDRs increased in the last quarter with Hindalco increasing by 210.32 per cent to 7.53 per cent, Reliance by 210.04 per cent to 8.19 per cent, and Indian Rayon by 196.10 per cent to 18.12 per cent.The first quarter began with celebrations over a hopeful budget and successful launch of the VSNL issue while the GDR Index gained 11.85 per cent. The announcement of the slack season credit policy and new government at the Centre in second quarter boosted the market sentiment despite poor corporate results, pushing the Skindia GDR index up by 28.89 per cent. The bonus issue by Reliance Industries also added cheer to the market.The Skindia GDR index touched its all time high of 1,319.78 on August 4. However, expectation of a sharp devaluation of the rupee, impending petro price hike and crisis in the Asian markets in late August shadowed the upsurge in both the indices.The last quarter witnessed the highest volatility due to the global meltdown, exchange rate fluctuations and political uncertainty. Net FIIs investment turned negative in November for the first time in many years. Circumspection by investors in the emerging markets led to the postponement of the GAIL's GDR issue. The Skindia GDR Index tumbled to its 52-week low of 799.99 on December 12.The success of the MTNL GDR issue was the only highlight in the otherwise depressed quarter of 1997.
