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May 16, 1998


Pokhran tremors shake capital markets

The uncertainty about the kind of sanctions to be imposed on India has affected the earnings of companies.

Thus, the Skindia GDR index lost 4.28 per cent, coming down to 907.55 points on May 12, and a further 7.33 per cent to 841.03 points on May 13, on account of two more tests. In comparison, the BSE Sensex lost 77.07 points and 162.37 points.

However, the indices recovered by the end of the week.

During the week, 65 GDRs and the underlying shares lost 4.10 per cent and 4.76 per cent respectively. Twenty of the 65 (30.77 per cent) GDRs were quoting at their 52-week low. Among them were pivotals like Indian Hotels at $ 13.75 (May 13), Mahindra and Mahindra at $ 6.40 (May 14) and VSNL at $ 11.50 (May 13).

GDRs from telecom, aluminium and autos were among the major losers, losing 11.61 per cent, 11.45 per cent and 9.81 per cent respectively.

The textile industry was the only gainer, appreciating 2.40 per cent. Aluminium and cement sectors were the mojor losers in the underlying shares, falling 8.63 per cent and 8.08 per cent.

With a rise of 3.16 per cent, the steel sector was the only gainer in the shares.

Although there was a rise in the net profits of Hindalco and Indo-Gulf, the overall performance of the Birla group companies have not been very encouraging in fiscal 1997-98. Indo-Gulf was the star performer, with its net profit rising 30.56 per cent, to Rs 1.41 billion, on announcement of results on May 4. The GDR was unchanged at $ 1.35, whereas its share appreciated by 9.88 per cent to Rs 41.15.

Hindalco's net profit rose 26.85 per cent to Rs 4.96 billion. The results on May 8 failed to enthuse the markets, and its GDR and share depreciated 1.23 per cent to $ 20 and 6.84 per cent to Rs 739. During the year, its GDR lost 39.34 per cent while its share declined 27.05 per cent.

Indian Rayon's net profit was marginally down by 1.05 per cent at Rs 2.12 billion. On announcement of the results on May 6, its GDR and share fell 1.71 per cent to $ 5.75, and 2.30 per cent to Rs 229.80. During the year, its GDR and share have lost 53.85 per cent and 40.30 per cent respectively.

Grasim performed the worst with its net profit falling 16 per cent to Rs 2.31 billion. On the back of higher dividends of 67.50 per cent, its GDR rose by 2.33 per cent to $ 11; its share was up by 2.92 per cent to Rs 353 on May 5, the day the results were announced. The GDR and share fell 28.89 per cent and 9.01 per cent during the year.


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