March 23 (Bloomberg) -- Indian companies’ American depositary receipts rebounded from their biggest drop in six weeks on speculation the declines sparked by the central bank’s surprise interest rate increase were overdone.
The Bank of New York Mellon India ADR Index climbed 1.3 percent to 1,112.65 yesterday in New York. The gauge retreated 1.8 percent on March 19 after India’s central bank unexpectedly raised interest rates for the first time since July 2008. The decision was announced after the close of trading in Mumbai. India’s benchmark Sensex Index fell 1 percent yesterday.
“The ADRs fell too much on Friday, there was an overreaction to the rate hike,” said Greg Lesko, who helps manage $750 million at Deltec Asset Management in New York.
U.S.-traded shares of ICICI Bank Ltd., the country’s second-biggest lender, added 0.9 percent to $41.33 after dropping 3.8 percent at the end of last week. Infosys Technologies Ltd., India’s second-largest software exporter, increased 1.5 percent to $61.59 after retreating 1.7 percent.
“India is recovering faster than expected, so this should be taken as a positive indication of the health of the Indian economy,” said Vikas Pershad, the Chicago-based chief executive officer of Veda Investments LLC. “The initial reaction in certain stocks like ICICI Bank Ltd.’s ADRs is overdone.”
The Reserve Bank of India increased the benchmark reverse repurchase rate to 3.5 percent from a record-low 3.25 percent and the repurchase rate to 5 percent from 4.75 percent, according to a statement in Mumbai. The decision came a month before the bank’s scheduled monetary policy meeting.
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