Budget 2012-13: StanChart's India shares soar on budget proposal

Standard Chartered Plc's Indian shares rose as much as 20%, their maximum upper limit, after the union budget on Friday proposed permitting "two-way fungibility" for Indian depositary receipts, or IDRs.

U.K.-based Standard Chartered listed on the Indian stock exchanges in 2010 by issuing depositary receipts in a move to strengthen its brand and presence in Asia's third-largest economy, which was its biggest market that year.
The issue of IDRs was aimed at encouraging foreign companies to tap the Indian capital markets, but the absence of two-way fungibility has hurt liquidity with no other company subsequently tapping the instrument.
Making the receipts two-way fungible would allow Standard Chartered's India shareholders to convert their shares into underlying London stocks of the bank and vice versa, to gain from arbitrage opportunity, dealers said.
Standard Chartered India shares were up nearly 20% at Rs 93.80 after the budget proposal, while the BSE Sensex was trading lower.
Finance Minister Pranab Mukherjee said he proposed allowing IDRs to become two-way fungible with the aim of boosting foreign participation in the Indian capital market.
Details of the proposal were not immediately available.