Standard Chartered DVR gains for second day

NEW DELHI: Standard Chartered, the lone India listed foreign bank, rose to 7% on Monday for second day in a row after finance minster Pranab Mukherjee allowed two-way fungibility of Indian depositary receipts.

The minister’s move could lead to many other international companies listing their shares in India that could lead to seamless movement of capital between their home country and India.

At 11:00 a.m., shares of the company were trading 7% higher at Rs100.70. The stock surged to 20% limit post the Union Budget 2012 on Friday.

The move allows investors to buy Indian listed shares and sell them in the London market and vice versa. This improves liquidity. The stock had tanked when at the end of one year of listing Securities & Exchange Board of India declined to permit two-way fungibility citing abundant liquidity.

Standard Chartered had raised Rs 2,486 crore in its IDR offering in June 2010. No other foreign entity has since then entered the market in the absence of two-way fungibility.

Technical View: Mitesh Thacker of miteshthacker.com

It’s a positive announcement for IDRs in the budget. The stock ran up strongly on Friday, but it has now cooled-off a bit. However the trend remains on the upside.

I will not be surprised if the IDR hits Rs118-120 in the next couple of weeks to come. So yes, it is a buy on declines. If somebody has not bought it now, levels of Rs95-96 are good buying levels.