SKINDIA INDIAN GDR MONITOR
Volume VI No 21	May 21-May 27, 1999	28-May-99

News that Indian Air force planes were pounding the positions taken up by Pakistan-backed infiltrators in Jammu & Kashmir's Kargil area sent shock waves into the capital markets. Nervousness among investors over the possibility of an escalation in the flare-up at the cease-fire line with Pakistan led to an across the board sell-off. As a result the Skindia GDR index and the BSE Sensex crashed down by 96.58 points and 217 points respectively, over the week. Thus reflecting a weak sentiment the average spreads of the 39 most actively traded DRs widened to 8.65% on May 27 from 8.50% on May 20 and the average GDR premium over the underlying shares of 64 DRs moved up from 3.23% on May 20 to 4.58% on May 27. During the week the DRs on an average lost 5.01% and the shares lost 6.39%. In the industry wise break up IT sector was the top gainer appreciating 6.13% followed by cables and fertiliser sector gaining 3.13% and 1.39% respectively. The top loser was the aluminium sector depreciating 12.62% followed by steel and pharma sector shedding 10.00% and 9.43% respectively. On the other hand, in the underlying shares there were no gainers. The top losers were the power sector shedding 14.17% followed by cement sector losing 12.91%. Auto sector in the top gear With the turn around in the demand for vehicles the auto sector stocks are expected to do well. Sales of medium and heavy commercial vehicles recorded a rise of 65.33% to 4,950 vehicles in the month of April compared to April 1998. The beneficiaries of this surge in demand are TELCO and Ashok Leyland, the main producers of medium and heavy commercial vehicles in India. There's good news for Bajaj Auto as well, motorcycle sales grew by more than 18.00% to 1,27,241 units. The negative growth of 3.90% to 96,367 units will be offset, for Bajaj Auto, by the surge in motorcycle demand. Mirroring this view, the GDRs of auto sector on an average moved up 11.61% in the period 1st April 1999 to 25th May 1999. Just about 3.92% less than the Skindia GDR Index which appreciated 15.53% in the same period. The top gainer in the sector was Ashok Leyland which increased 29.03% to $4.00, followed by TELCO which moved up by 15.29% to $4.53.

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