HDFC Bank ADR Falls 4%; Infosys, Wipro American Depositary Receipts Tumble Too - Explained Why!

The American Depositary Receipts (ADR) of major Indian stocks namely HDFC Bank, Infosys and Wipro tumbled on January 23rd. The worst to take the bears' blow was India's largest bank in terms of market share, HDFC Bank. The reason behind the decline in ADRs of these stocks comes after Sensex and Nifty crashed by at least 1.5% in a single day. These companies Indian shares also plunged!

HDFC Bank ADR

On Tuesday, HDFC Bank's ADR dipped by 4.5% to $53.57 on the New York Stock Exchange (NYSE) compared to the previous session's print of $56.10. This was near its day's low of $53.47. Overall, HDFC Bank's ADR dipped by nearly 5%.

Infosys ADR

Meanwhile, Infosys ADR dived by 0.53% to $19.77 compared to the previous day's level of $19.87. The ADR traded in the range of $19.61 - 19.96.

Wipro ADR

Also, Wipro ADR shed 1.10% to $5.68, compared to the previous day's $5.74 level. The ADR ranged between $5.62 - 5.70.

HDFC Bank Share Price

On BSE, HDFC Bank's share price hit a new 52-week low of Rs 1,425 apiece before ending at Rs 1,427.60 apiece down by 3.5%. The largest bank's market cap has now slipped below Rs 11 lakh crore mark to Rs 10,83,903.12 crore as of January 23, 2024.

Infosys, Wipro Share Price

Moreover, the share prices of Infosys and Wipro dipped as well. Infosys, which is the second largest IT firm in India in terms of m-cap, slipped by 0.4% to close at Rs 1,642.20 apiece, and Wipro's share plunged 1.72% to end at Rs 469.90 apiece. These shares finished near their day's low.

Indian stock market was in a frantic selling with Sensex and Nifty erasing their critical mark of 71,000 and 21,500. The 30-scrip benchmark nosedived by 1053.10 points or 1.47% to end at 70,370.55, while the 50-scrip benchmark fell by 333 points or 1.54% to close at 21,238.80.

Explaining the free fall, Ajit Mishra, SVP - Technical Research, Religare Broking said, markets resumed the corrective tone and shed over one and a half percent. Initially, the Nifty opened with an upside gap, tracking firm global cues and buoyancy in banking major, ICICI Bank, in reaction to its numbers.

However, Mishra added, the move fizzled out in no time and the index settled closer to the day's low at 21,238.80 level. All key sectors, barring pharma, ended lower wherein realty, metal and energy were among the worst hit. The broader indices too witnessed a sharp cut and lost nearly 3% each.

Many stocks that recorded all-time high gains last week also saw correction as investors cashed in their gains.

What are ADRs?

As per SEC FAQs, ADRs allow U.S. investors to invest in non-U.S. companies and give non-U.S. companies easier access to the U.S. capital markets. Many non-U.S. issuers use ADRs as a means of raising capital or establishing a trading presence in the U.S. The non-U.S. company may sometimes be referred to as a "foreign private issuer.

An ADR is a negotiable certificate that evidences an ownership interest in American Depositary Shares ("ADSs") which, in turn, represent an interest in the shares of a non-U.S. company that have been deposited with a U.S. bank. It is similar to a stock certificate representing shares of stock. The terms ADR and ADS are often used interchangeably by market participants.

ADRs trade in U.S. dollars and clear through U.S. settlement systems, allowing ADR holders to avoid having to transact in a foreign currency.

ADRs are always registered with the SEC.

Disclaimer: The write-up just highlights the stocks and ADRs information related to their performance, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on the stock mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.