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Budget triggers upswing; Skindia GDR Index up 64 points to 643.64

The Indian Global Depository Receipts or GDRs and BSE Sensex increased moderately during the week ended March 5, 1999, following announcement of incentives in Budget.

In the recent past, India has been a cautious market for the foreign investors. However, the foreign investors have turned positive towards India in the post-Budget phase.

The domestic and the GDR markets have seen a surge from February 27 onwards, pushing the Skindia GDR Index up by 64.34 points and the Sensex up by 320.67 points.

The base for the sudden rise was built by the political unity displayed by the coalition government in the Lok Sabha over dismissal of the Bihar government. This strengthened the feel-good sentiment in the capital market buoyed by the Budget and reduction in interest rates by the Reserve Bank of India.

As a result, the Skindia GDR Index and the Sensex oscillated in a wide band of 15.08 per cent and 12.57 per cent respectively.

The average spreads of 37 most actively traded GDRs narrowed to 9.14 per cent on March 4 from 9.32 per cent on February 25. The average premia of the 61 GDRs moved up to 4.87 per cent on March 4 from 3.08 per cent on February 25.

During the week, the Skindia GDR Index P/E ratio also went up by 10.24 per cent from 23.51 to 25.91 on March 4 and the Skindia GDR Index premium gained by 10.56 per cent to 14.38 per cent from 13.01 per cent.

The top gainers for the week were Core Healthcare and Sanghi Polyester -- both appreciated by 28.57 per cent each to $ 0.45. ITC went up by 24.68 per cent to $ 26.40.

The top losers for the week were SAIL which depreciated by 18.81 per cent to $ 2.05, IPCL by 17.87 per cent to $ 7.13 and BSES Limited by 15 per cent to $ 10.20.

Skindia Finance said that the Budget and the cut in interest rates have been favourable to the banking sector as State Bank of India's GDR increased by 24.13 per cent. Software sector gained from government's proposals for zero per cent tax and to make Y2K expenditure 100 per cent deductible for this year.

Pharma sector too gained from steps towards relaxed price controls coupled with the likely passing of the Patents Bill. This has pushed up the GDR price of Core Healthcare by 28.57 per cent, Ranbaxy by 13.87 per cent and Dr Reddy's by 7.14 per cent. However, Wockhardt was the only loser by 9.68 per cent.

Consumer sector benefitted through reduction in excise on packaged tea, soaps and detergents. No change in duty on cigarettes helped push up the ITC GDR by 24.69 per cent. GDRs of PSUs went up on news of active disinvestment plans. Fears of heavy sales by UTI have subsided.

Concern over the stability of the coalition government and growth rates has been neutralised by the positive features of the Budget as is evident from the reign of the bulls over the capital market, a Skindia media statement said.

UNI

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