SKINDIA INDIAN GDR MONITOR
Volume IV No 46	Nov 21-Nov 27, 1997	29-Nov-97

Undertone remains weak in the GDR market Investors in the GDR market continued to remain cautious during the week on account of an extremely fluid political situation and a further depreciation of the rupee. The Skindia GDR Index continued to drift downwards touching a new 6 month low of 850 (Nov 24). The 64 GDRs lost 4% on an average during the week with 34 trading at their 52 week lows. In the domestic market, news that the Congress and UF were close to a compromise led to a recovery with the BSE Sensex gaining 2.62% on Nov 27. However, this recovery was short-lived as no compromise was reached eventually leading to a fall of the Gujral government. In the last two weeks, the Skindia GDR Index has fallen 10.18% as compared to a gain of 1.63% in the BSE Sensex. This sharp fall in the GDR market indicates that investors abroad are jittery about India on account of the political crisis, weakening of the rupee and volatility in the Asian markets. Activity in the markets is likely to slow down in the coming days due to uncertainty as to who would form the next government and possibility of dissolution of parliament leading to elections. To add to this, with the financial year abroad coming to an end in Dec and very few trading sessions before the markets close for Christmas, investments might further take a beating. Corporate results The State Bank of India has posted a 9.97% gain in net profit to Rs.704.70 cr in the first half of the current financial year. Operating profits have however declined by 20.16% to Rs.1,362.84 cr on account of a fall in interest income and a drop in forex earnings. The news was not too well received by the markets as its GDR fell 14.06% to touch its 52 week low of $13.75. In the domestic market its underlying share has fallen 7.30% during the week to Rs.225.25 as compared to a rise of 2.97% in the BSE Sensex. ITC Ltd stunned the markets with a 66.89% rise in net profits to Rs.301.73 cr over a 7.94% increase in turnover. The announcement led to a sharp spurt in its GDR by 7.93% to $17.00 as compared to a gain of 3.38% in the Skindia GDR Index in the same period. Its underlying share gained 6.82% to Rs.540.50 while the BSE Sensex gained 1.63%. Skindia GDR Index & BSE Sensex - A study of common stocks A study of stocks common in the Skindia GDR Index and the BSE Sensex in the last one year reveals that ITC, L&T and SBI are highly co-related to both the indices. ITC has a co-relation of 55.40% to the Skindia GDR Index and 41.62% to the BSE Sensex, L&T with 53.60% and 55.36% and SBI with 52.60% and 61.90% respectively.

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