SKINDIA INDIAN GDR MONITOR
Volume VI No 20	May 14-May 20, 1999	21-May-99

Breaks applied on the free run of the stock markets The week which started on a bullish note ended with markets taking a southward direction on heavy profit taking. There was hectic buying in the stocks by the foreign as well as domestic funds as a result of which the markets entered the over bought zone. Thus the technical correction due, happened this week in both the markets because of which the Skindia GDR Index fell marginally by 1.16 points, while the BSE Sensex by 64.77 points. Another reason for the breaks in the rise of the indices was the reduction on investments by the FIIs. This reduction could be attributed to the possibility of hike in the Federal Reserve interest rates on the back of rising inflation in the United States and the anticipation that Malaysia may again enter the Morgan Stanley's MSCI Emerging Markets Index, (the index is used by FIIs in allocating funds to different emerging markets), and hence some funds might flow to Malaysia. During the week the premium of the 63 depository receipts on an average fell down to 3.23% on May 20 from 4.89% on May 13 and the spreads between the bid and ask of the 39 most actively traded Indian DRs widened to 8.50% on May 20 from 8.12% on May 13. By the end of the week as the domestic and foreign institutions refrained from any fresh buying the 63 DRs on an average lost 0.15% and the shares 10.71%. In GDRs, telecom sector was the major loser falling 8.17% followed by hotel which fell 1.81% and pharma falling 1.48%. Fertiliser sector was the only top gainer gaining 15.70%. In shares pharma with a decline of 9.03% was the top loser followed by aluminium and cable, losing 4.06% and 3.20% respectively. The top gainers in shares was the steel sector gaining 15.56% followed by power sector gaining 14.81% on the back of notification by the ministry of de-linking of revenues from the bank rate and also when the markets fell the huge quantities were absorbed by funds who are not very active traders thus reducing the floating stock in the markets and creating a demand supply gap. The third top gainer was the fertiliser sector appreciating 13.58%. The gain in the fertiliser sector both, in the GDR and domestic market was the result of increase in subsidy of di-ammonium phosphate (DAP) by Rs 300 per tonne. Other News MTNL stock tried to move against the market trend on talks of it being listed on New York Stock Exchange. But in the GDR markets it ended the week in the negative territory declining 2.71% to US $ 10.75 while, in the domestic markets it managed to remain on the positive column with a marginal rise of 0.45% to Rs 201.10.

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