However, shortcovering and the attractive valuations for Indian paper saw the Skindia GDR Index close at the week's high of 577 points, a net gain of 3.31 per cent over the previous week's close.

"The increase of India's weightage by Morgan Stanley Capital International in its Emerging Markets Index seems to have had a positive impact on GDRs which closed 2.10 per cent higher on August 19," explained an analyst.

He further explained that on August 20 the indices soared on account of the speculative buying following the Reserve Bank'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 a sharp recovery of 35.43 per cent to close at 6.60 per cent, whilethe Skindia GDR price-earnings index closed at 13.61 points, witnessing a net gain of 5.43 per cent.

The 65 GDRs on an average gained 2.44 per cent while their underlying shares appreciated by 0.41 per cent.

Among the GDRs, the representatives of the power, auto and fertiliser sector registered maximum gains. The top gainers were Crompton Greaves, Indo Gulf and CESC.

However, the recovery in the sentiment failed to have a positive impact on the GDRs of the hotel and pharma sectors, which led to a further price erosion in the GDRs of EIH and Ranbaxy Labs.

A study conducted by Skindia Finance on the performance of Reliance since the announcement of its first-quarter results shows that the performance has failed to enthuse the market.

Reliance posted a rise of 17.60 per cent in its 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 2.87 per cent to close at Rs142.

During the period between July 1 and August 20, the Reliance GDR declined by 24.29 per cent against a fall of 12.80 per cent in the Skindia GDR Index. The Reliance GDR had a volatility of 4.56 per cent during the same period.

Interestingly, the underlying share lost 15.58 per cent, compared with a fall of 7.46 per cent in the Sensex.