SKINDIA INDIAN GDR MONITOR
Volume VI No 09	Feb 26-Mar 04, 1999	05-Mar-99

Budget proposal push up the GDR market India has in the recent past been a cautious market for the foreign investors as more often than not fingers have been burnt. However, the reaction on the whole by the Foreign Investments has been positive towards India. The domestic and the GDR markets have seen a surge from 27th Feb onwards pushing the Skindia GDR index up by 64.34 points and the BSE sensex up by 320.67 points. The base for the sudden rise was built by the political unity shown by the coalition government in the Lok Sabha over dismissal of the Bihar Government. This was further strengthened by the capital market friendly budget and also by the reduction in the interest rates by the Reserve Bank of India. As a result, the Skindia GDR index and the BSE sensex oscillated in a wide band of 15.08% and 12.57% respectively.Due to increase activity in the bourses the average spreads of 37 most actively traded GDRs narrowed to 9.14% on March 04 from 9.32% on Feb 25, and the average premiums of the 61 GDRs moved up to 4.87% on March 04 from 3.08% on Feb 25. The budget and the cut in interest rates has been favourable to the banking sector as State bank of India's GDR increased by 24.13% , software sector through 0% tax, and making Y2K expenditure 100% deductible for FY00, Pharma through steps towards relaxed price controls coupled with the likely passing of the Patents Bill has pushed up the GDR price of Core health by 28.57%, Ranbaxy by 13.87% and Dr.Reddy's by 7.14%, however, Wockhardt was the only loser by 9.68%, consumer sector through reduction in excise on packaged tea, soaps and detergents, also a no increase of duty on cigarettes pushed up the ITC GDR by 24.69%, PSUs through active disinvestment plans and fear of heavy sales by UTI now subsiding. Concern over the stability of the coalition government and optimistic growth rates have been expressed but they have as of now been sidelined by the positive side of the budget as is evident from the reign of the Bulls over the capital markets.

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