RIL, RNRL shares to remain in focus on Friday

RIL, RNRL shares to remain in focus on Friday

MUMBAI: Shares of Reliance Industries and Reliance Natural Resource Ltd (RNRL) will remain in focus tomorrow as the Supreme Court is likely to deliver its verdict on gas pricing and supply dispute between the two companies, say analysts.

Marketmen said Reliance Industries and RNRL stocks, which saw profit booking today, are likely to affect investor sentiment and the movement of the market tomorrow.

"The market is keenly awaiting the judgement of RIL-RNRL case and the verdict would have significant impact on investor sentiments. Both the stocks would be in the focus," Geojit BNP Paribas Financial Services Research Head Alex Mathews said.

"Once the decision is out it will be good for the market, whichever way the verdict goes, as it will remove the uncertainty," Purpleline Investment Advisors Director & CEO P K Agarwal said.

Shares of RIL today closed nearly one per cent down at Rs 1,010.90, while RNRL shares fell marginally to Rs 68.35 on the Bombay Stock Exchange.

"The Supreme Court's verdict would certainly have impact on the movement of the market. RIL, being a heavyweight stock, would guide the movement in the key indices," Bonanza Portfolio Assistant VP (Research-Equity) Avinash Gupta said.

The dispute between Reliance Industries and RNRL, the companies led by billionaire brothers Mukesh Ambani and Anil Ambani, is over supply of 28 million cubic meter of gas a day to RNRL by RIL.

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RNRL is seeking gas from RIL's KG-D6 gas fields at USD 2.34 per mmBtu, 44 per cent lower than the government set price, for its proposed 7,800 MW power plant at Dadri.

While, RIL's contention is that it cannot sell gas at a price less than USD 4.20 per mmBtu as set by the government and to customers other than those identified in accordance with the Gas Utilisation Policy (GUP).



SC judgement on RIL-RNRL gas dispute on Friday

NEW DELHI: The Supreme Court will deliver tomorrow its verdict on the gas pricing and supply dispute between energy companies RIL and RNRL. ( Watch )

A three-judge bench headed by Chief Justice K G Balakrishnan, who will be demitting office on May 11, had reserved its judgement in the lawsuit after arguments concluded on December 18.

The dispute between Reliance Industries (RIL) and Reliance Natural Resources Ltd (RNRL), the companies led by billionaire brothers Mukesh Ambani and Anil Ambani, is over supply of 28 million cubic meter of gas a day to RNRL by RIL.

RNRL is seeking gas from RIL's KG-D6 gas fields at $2.34 per mmBtu, 44 per cent lower than the government set price, for its proposed 7,800 MW power plant at Dadri.

RIL's contention is that it cannot sell gas at a price less than $4.20 per mmBtu as set by the government and to customers other than those identified in accordance with the Gas Utilisation Policy (GUP).

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→ Avoid Reliance Industries and RNRL: Deepak Mohoni, trendwatchindia.com

The Bombay High Court had last year upheld RNRL's claim for gas as made out in a family agreement that split the Reliance business empire between the two brothers.

The Apex court heard the case for 26 days since October 20. It also witnessed the recusal of Justice R V Raveendran from the Bench after hearing the matter for six days on the ground that he held shares of both RIL and RNRL.




Src: Economictimes

RIL-RNRL: What SC verdict could mean for investors

RIL-RNRL: What SC verdict could mean for investors

MUMBAI: Share prices of Reliance Industries (RIL) and Reliance Natural Resources (RNRL) have reacted sharply ever since reports of Supreme Court's early verdict on the KG 6 basin gas dispute surfaced. According to marketmen, the apex court may pass judgment in favour of RNRL. The verdict is likely to have some sentimental impact on the stock market, as RIL is an index heavyweight.

Analysts are not expecting a major correction in RIL even if it loses the case whereas RNRL is expected to react sharply.

"If RNRL loses the case then it will only concern the company shareholders or bear a negative sentimental impact on ADAG group shares. But if the verdict is against index-heavyweight Reliance Industries, it can have a negative impact on the market. RIL may correct up to 5 per cent and move sideways for next few sessions," said DD Sharma, senior vice-president, equity, Anand Rathi.

"RNRL will turn volatile and move sharply in either direction once the judgment is out. If it wins the case then it may move 25-30 per cent on the upside. But if it loses the case then it will fall more than 50 per cent," Sharma added.

Siddarth Bhamre, Head – Derivatives & Investment Advisory at Angel Broking, is of the view that traders should avoid trading in futures as volatility in the RNRL stock will increase tremendously. He suggests taking positions ahead of the verdict.

Also Read

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→ Avoid fresh entry in RNRL at this point: Angel Broking

"If RNRL loses the case then there will be fundamental downside for the stock. Speculative traders can buy put options in case they expect the company to lose the case. If they expect RNRL to win the case then buy 70 call option," Bhamre added.

RIL and RNRL have been fighting a legal battle over the supply of 28 million units of gas for the next 17 years at $2.34 per unit to RNRL from the gas fields of Krishna-Godavari basin, which had been awarded to Mukesh Ambani's RIL as part of the New Exploration or Licensing Policy (NELP).

"We note that a decision on the ongoing RIL-RNRL gas case dispute in the apex court is expected soon. We would highlight that our base-case fair value of Rs 1,220 on factors (a) gas sales of 28mmscmd to RNRL at $2.3/mmbtu starting FY13E (b) Profit Petroleum (PP) calculation at $2.3/mmbtu.

Hence, our fair value would be at risk to the tune of Rs 48 (4% of TP) if the PP calculation for the disputed quantity is decided at $4.2/mmbtu. A favourable verdict would imply Rs 35 upside to our fair value," said Ambit Capital in a research note after Reliance Industries reported fourth quarter results. The brokerage has a ‘Buy' rating on the stock with target price of Rs 1220 per share.

In the past one-week, shares of Reliance Industries have fallen around 4 per cent while those of Reliance Natural Resources have galloped around 10 per cent. The shares are witnessing sideways movement ahead of the verdict.

At 11:20 am on NSE, shares of RNRL were up 0.29 per cent at Rs 68.70 whereas Reliance Industries was at Rs 1018.20, down 0.24 per cent.



What are the Ambanis fighting for? | The gas row


RIL-RNRL verdict: 2 derivatives strategies to play the stocks



Src: Economictimes.

Asia shares to drop on Greek woes

Asia shares to drop on Greek woes


WELLINGTON: Asian stocks are set to slide on Thursday, as ongoing fears that Greece's debt woes could spread to larger euro zone nations hit global markets.

The main US indices were between 0.6 per cent and 0.9 per cent lower, with resources and industrial stocks the hardest hit, as investors feared possible contagion from the Greek crisis could damage global growth.

The euro hit a 14-month low against the U.S. dollar and traditional safe havens such as the yen and US Treasuries gained as anxious investors eyed heavily indebted Spain and Portugal, while violent protests against austerity measures rocked Greece.

British and Europen shares fell by as much as 1.3 per cent, as banks continued to suffer, with rating agency Moody's saying it was reviewing Portugal's rating for a possible downgrade.

Asian stocks listed on Wall Street fell 0.8 per cent, while MSCI's measure of Asia Pacific stocks excluding Japan was 1.9 per cent lower.

Japanese markets will be open for the first time this week after being closed for the "golden week" series of public holidays.

Japanese shares look likely to match the sharp losses seen on global equity markets over the past few days, with Nikkei futures traded in Chicago 380 points below the last closing level in Osaka.

Australian shares are also set to open lower, with share price index futures down 54 points to 4,637, a 37 point discount to the underlying S&P/ASX 200 index close on Wednesday.

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Heard on the Street


Godrej Consumer zooms 9% on fund talk
Shares of Godrej Consumer surged 9% to close at Rs 307.90 on Wednesday, defying the bearish trend in the broader market. According to grapevine, the company is looking to raise between Rs 600-1,000 crore by way of a qualified institutional placement (QIP) to part finance likely acquisitions in the future, including the purchase of Sara Lee’s stake in its joint venture. Analysts tracking the company say Godrej Consumer may also acquire a hair colour firm in Latin America shortly.

A highly placed official of the Godrej Group is learnt to have been in Singapore recently to meet some foreign institutional investors and appraise them of the company’s plans for the recent acquisitions (one in Indonesia and the other in Nigeria). Buzz is that Godrej Consumer may be able to sell shares to institutional investors at a slight premium to the market price. This is in contrast to most qualified institutional placements by companies in recent times, which had to be deferred till the stock price cooled down to levels that were palatable to fund managers.

On the BSE, 3.68 lakh shares on Godrej Consumer were traded, compared to its two-week daily average volume of 1.27 lakh shares. A fund manager with a sizeable stake in the company said the stock was not exactly cheap at current levels. “The robust earnings growth in 2009-10 was helped to a significant extent by favourable raw material prices. The growth rate for this year will be healthy, but not as strong as it was last year,” the fund manager said. He added that investors will be closely watching the company’s strategies to maximise gains from its recent acquisitions. That will be the deciding factor in the stock getting re-rated hereon, he said.


‘ Friendly circles’ stock up RIL ahead of SC verdict
Reliance Industries shares saw good amount of buying interest at lower levels on Wednesday. The stock fell to an intra-day low of Rs 1,000, but climbed to Rs 1,020.75 at close, flat over the previous close. Dealers tracking the counter said the rebound was driven by support from “friendly circles”. Fund managers are awaiting the Supreme Court verdict on the gas dispute before taking a call on the stock, brokers said.

While foreign funds were heavy sellers, domestic fund managers used the declines in many other stocks to take up fresh positions or add to the existing positions, they said. Buzz is that there was good demand for shares of JSW Steel and Jindal Steel and Power. The Big Daddy of domestic institutions, a foreign fund that has trouble getting sleep, and a private insurer ‘Fun Life’ are said to have together picked up close to 10-12 lakh shares of JSW Steel. Also, the Big Daddy is learnt to have picked up around 5 lakh shares of Jindal Steel and Power.

South Indian Bank recovers from audit scare
SOUTH Indian Bank shares stabilised on Wednesday after crashing nearly 14% in the past couple of sessions. The fall was triggered after the bank said that it missed recording the interest expense on a special deposit scheme due to an accounting error. This dragged down the bank’s profits in the last quarter as the excess earnings for the first nine months had to be adjusted.

The move prompted some analysts to downgrade the stock. When contacted, VA Joseph, managing director and chief executive said: “The scheme was not linked to our IT system. This has been accounted at the end of the year now and steps have been taken to see that this does not recur.” But analysts are wondering how an error of such magnitude missed the attention of the bank and its auditors for three quarters.

Contributed by Santosh Nair

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Src: Economictimes, DP blog