1. Rising Rupee & Market, Benefit To ADR Holder: An Approach To Risk – Return
Trade Off
International Diversification of Portfolio, for High
Return & Reducing Systematic Risk
Citi Bank
Depository
DR
for ABC
Investor
(India) Ltd.
In US
Capital
Creation of
Depository
Market
Listing on NYSE/
NASDAQ/LSE/LxSE
IN ABC INDIA LTD
LISTED ON BSE
•10 ADRs representing one
share each.
•BSE rises by 25 %
• i.e. 10 shares of ABC ltd.
@ Rs. 480 each.
•ABC Shares has beta
coefficient 1.00
appreciated by 25%
• Invested Rs 4800/-
Inflow
• When US $ 1.00 = Rs
48.00
(US $ 100)
• US $ 100 Inflow of Capital
•Current market
price, Rs 600/- each
share
Invested US $ 100
Received US $ 150
Collected Rs
6000/-
Rupee appreciate to US $ 1.00 = Rs 40/-
Net Saving US $ 50
10 shares of
ABC India ltd
sold for Rs
600/- (net tax
& brokerage)
Return to ADR Holder
Conversion of Rs. 6000.00 US $ 150
1

2. International Diversification of Portfolio, for High
Return & Reducing Systematic Risk
Growing Economy
• Stability of Rupee
• Rising Sensex
Entry of
Capital Inflow
• Control in Inflation
DR
• High GDP
Investor
• Partial Capital
Listing on NYSE/
NASDAQ/LSE/
LxSE
SHORT – LISTING
BLUE CHIPS
COMPANIES
• Infosys
• UTI Bank
• Hindalco
• Ranbaxy
•Tata Motors
EMERGING
SECTORS
• I.T
• Banks
• Metal
• Pharmaceuticals
• Automobile
PRIMARY MARKET
INTERNAL MARKET
Profit & capital out flow
Account Convertibility
Creation of
ADR/GDRS
Market
• Technology
• Good Governance
BSE/ NSE
EFFICIENT MARKET
• On Line Trading
• Dematerialization
• Foreign Broker
• Efficient Pricing
• Custodial Services
• FIIs presence
Two-way
discovery of
price &
arbitrage
Value For
Investment
•Higher share
price
•Liquidity
•Blue chip
•Increase in
FIIs holdings
•Expansion
stage of
companies
SECONDARY MARKET
EXTERNAL MARKET
Two-way Market Integration: Atop Down & Bottom Up Approach
Using the
Fungibility
Profit
Booking on
underlying
• Accounting Disclosure
• Global Perspective
High EPS and
Dividend
Conversion of Dividend
amount in US $
Remittance of US
$ to Holders
2