SKINDIA INDIAN GDR MONITOR
Volume IV No 43	Oct 24-Nov 6, 1997	8-Nov-97

The Global meltdown Impact of the worldwide meltdown in stock markets on Oct 28 was felt in the GDR market too. The reconstituted Skindia GDR Index fell 6.31% to 983.51, falling below its par value of 1000. Despite a recovery in world markets the following day, the undertone in the GDR market continued to be jittery with the Skindia GDR Index falling a further 2.38% to 960.05. Of the 64 GDRs, 22 touched their 52 week lows. The sharp fall in the GDR's as compared to their underlying shares on Oct 29 led to the Skindia GDR Index Premium touching its all time low of 8.41%. The GDR market however regained lost ground in the following days due to renewed buying at lower levels with the Skindia GDR Index gaining 8.69% to 1043.45 (Nov 03). During the fortnight (Oct 24-Nov 06) not a single industry experienced a gain and the 64 GDRs fell an average 7.52% as compared to a fall of 5.93% in their underlying shares. Steel, Cable and Textile stocks were adversely affected in the GDR market falling an average 22.69%, 14.29% and 11.99% respectively. GAIL postpones GDR issue - A fallout of the asian crisis The fallout in Hong Kong and high volatility in global markets has increased the risk for investors investing in emerging markets. Keeping this in mind, they wanted to see some GDR discount to GAIL's domestic price to cushion against possible losses in volatile markets. The govt had set a minimum price of Rs.125 while actual offers came in at around Rs.105-Rs.115. The issue was thus postponed more because of external factors rather than a negative view on the company or India. Announcement of the deferment dampened sentiment in the GDR and domestic markets as marketmen now felt it would be difficult for the govt to meet its objective of containing fiscal deficit to 4.5%. The govt is now toying with the idea of disinvesting a part of the issue in the domestic market. Despite cancellation of GAIL's GDR issue and turbulence in the asian markets , MTNL is likely to sail through on time. Skindia reconstitutes GDR Index Economic reforms and liberalisation of the financial sector have brought about momentous changes to the capital markets making it necessary to construct an index which is in tune with these changes. The new Skindia GDR Index has a base date of Jan 02, 1995 and base value of 1000. Securities in the index set are selected based on the spreads between the bids and offers, ensuring high level of liquidity at any given point of time. Weightages of the index set are based on the total market capitalisation of the company. The index will be reviewed every quarter.

DISCLAIMER : Factual material is obtained from sources believed to be reliable and SkindiaFinance is not responsible for any errors and omissions contained herein. Any recommendation contained in this report may not be suitable for all issuers.