The Hindu Business Line : Dismal 2008 for Indian counters

Year 2008 was dismal for investors in Indian equities in the US markets. Investors who have invested in the underlying equities of the Indian-listed ADRs could have lost heavily if one considers the average return given out by ADRs and their underlying equities.

Continued selling by FIIs due to the credit squeeze in their domestic markets and slowdown fears in India appeared to have affected the market sentiment.

While the average return posted by the list of ADRs was a negative 59.5 per cent (excluding Sify and Rediff.com as they have not listed their underlying equities in the Indian market), the return posted by them in the domestic market stood at a negative 55.46 per cent.

Taking Rediff.com and Sify into account, the average return works out to negative 61.8 per cent as they were the most beaten counters in 2008 with the former tumbling 80.8 per cent and the latter 68.6 per cent.

During the year, the BSE Sensex and the NSE Nifty plummeted 54 per cent and 53.4 per cent respectively. On the other hand, Nasdaq crashed by 29 per cent and the Dow Jones Industrial Average slipped 21 per cent in 2008.

In 2008, many ADRs touched new lows. For instance, ICICI Bank touched its all-time low at $11.01 during since its listing on March 28, 2000. Satyam Computer, Sify. Rediff.com, Tata Motors and Sterlite Industries also registered new lows. Counters such as Infosys and HDFC Bank have registered their multi-year lows.

Rediff.com was the worst affected as the ADR tumbled by 81 per cent followed by Sterlite 79.1 per cent, Tata Motors 76.2 per cent, Satyam Computer 71.4 per cent and ICICI Bank 70.3 per cent. The least affected were Tata Communications with a negative return of 42.5 per cent, Infosys (-44 per cent) and Wipro (-46 per cent).

Only the ADRs of Wipro and Tata Motors have outperformed their underlying equities.

On the premium/discount front, despite rupee fluctuating against the US dollar, most of the ADRs were hovering around the previous year’s levels with occasional fluctuations here and there.

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