However, in the final countdown on account of short covering and attractive valuations of Indian paper, the Skindia GDR index closed at the highest level registering a net gain of 3.31 per cent.

"The increase of India's weightage by the Morgan Stanley Capital International in its emerging markets free index seems to have had a positive impact on GDRs which closed 2.10 per cent higher on August 19," explained an analyst at Skindia Finance.

He further explained that on August 20, the indices soared on account of the speculative buying due to RBI's decision to ease pressure on the rupee and China's assurances that it will not devalue its currency. During the week ended August 20, the Skindia GDR premium index registered asharp recovery of 35.43 per cent to close at 6.60 per cent, while the Skindia GDR price earning index closed at 13.61 points witnessing a net gain of 5.43 per cent.

As a result, 65 GDRs on an average gained 2.44 per cent while their underlying shares appreciated 0.41 per cent. Among the GDRs, power, auto and fertiliser sectors registered maximum gains. The top gainers were Crompton Greaves, Indo Gulf and CESC.

However, the recovery in the sentiment failed to trickle down to the GDRs of hotel industry and pharma sector, which led to a further price erosion in the GDRs of EIH and Ranbaxy Laboratory. A study made by Skindia Finance on the performance of Reliance since the announcement of the first quarter results shows that its performance has failed to enthuse the market.

Reliance posted a rise of 17.60 per cent in net profit for the first quarter, but the stock took a beating on both local and GDR markets. On July 21, the Reliance GDR fell by 5.59 per cent to $ 6.75, while its underlying stock shed 2.87per cent to close at Rs 142.

During the period between July 1 to August 20, the Reliance GDR declined by 24.29 per cent against a fall of 12.80 per cent in the Skindia GDR index.