The government had planned to float GDR issues for Concor, GAIL and Indian Oil as part of its overall disinvestment plan. ``Now it is to be seen whether it will be able to offload equity of these companies in the next six months. Foreign investors are already selling Indian shares. Time is not ripe for Indian companies to raise funds abroad,'' said an investment banker.

After the MTNL GDR issue -- which raised over $ 350 million in November 1997 -- no other Indian company has ventured abroad. In fact, GAIL had last year started roadshows for itsGDR issue but was forced to pull out in the last minute. The anathema of foreign investors started with the sanctions imposed on India after the nuclear explosions. The downgrading of India's foreign currency outlook by Standard & Poor's exacerbated the problem. Now officials from Moody's, another global rating agency who are doing the rounds in India, are preparing ground for downgrading India.

If another downgrading indeed takes place, FIIs are likely to intensify their `quit India' movement. They have already pulled out nearly Rs 1,400 crore in May and June. The selling spree by foreign funds continues unabated on the overseas GDR markets (London and Luxembourg stock exchanges where Indian shares are listed). The Skindia GDR index plunged to an all-time low of 646.99 points on June 10. ``Against this background, how can you raise funds abroad?'' asked an FII fund manager. There is another school of thought which has seen the writing on the wall. ``It was a mistake to give too much importance to FIIs.This is basically hot money,'' said former BSE president M G Damani.

Top officials of Power Finance Corporation which just raised $ 100 million through an external commercial borrowing had many anxious moments before it could raise the targeted amount. Adding to the woes, many of the foreign investment firms which were acting as lead managers and arrangers of funds abroad are themselves facing tough times in India and other Asian markets. JP Morgan pulled out of equity business in Asian region. BZW changed hands and DMG stopped business in India. Once-bitten-twice-shy after the South-east Asian crisis where many of them lost money, foreign funds are selling Indian shares to meet their payment commitments in other Asian markets.

Reliance Industries and many software companies had planned to list their shares on the New York Stock Exchange which is known for tough listing guidelines and accounting standards. It is now to be seen whether these companies will be able to list their shares on this prestigiousexchange. The government recently allowed unlisted Indian companies to float issues abroad, but not a single company has come forward for it so far.

The result of all these will be seen on the foreign exchange and rupee fronts. The rupee has fallen by over 13 per cent against the dollar in the last six months. With the six-month forward premium on the dollar hovering in the range of 9-10 per cent, chances of further decline are strong. But there may be a silver lining. As BSE president J C Parekh observed, ``Indian companies, especially PSUs, should look at the domestic market now. They should raise funds here instead of tapping the GDR market." But the million dollar question is: Will this happen?