India's Q4 GDP grows at 8.6% y-o-y

India's Q4 GDP grows at 8.6% y-o-y


NEW DELHI: India's economy grew at its fastest pace in six months in the quarter through March 2010, fuelled mainly by government and consumer spending, which is expected to allow policymakers to focus on anchoring inflation that is hovering near 10 percent. ( Watch )

The 8.6 percent expansion in the fourth quarter of the fiscal year 2009/10 was broadly in line with a median forecast of 8.7 percent in a Reuters poll and lifted the annual average growth rate for the full fiscal year to a slightly better-than-expected 7.4 percent.

India's economy had grown 6.7 percent in 2008/09, and the Jan-March 2009/10 growth rate matches the revised data for the second quarter of 2009/10. The data is unlikely to evoke any immediate and aggressive policy response from the central bank, as concerns on Europe's debt crisis are expected to keep its policy on hold for now.

"It would be important to note that this release is a backward looking number and our sense is that policy makers would remain considerate of the external developments and any associated downside risk to overall growth," said Anubhuti Sahay, an economist with Standard Chartered Bank in Mumbai. Indian stocks and the rupee strengthened immediately after the data, while the benchmark bond yield rose 2 basis points from before the release.

The expansion in the March quarter was driven by government spending, manufacturing and services. Revival of growth in farm output after a contraction in the quarter ago underscored the broad-based recovery in Asia's third-largest economy.

More @ India's Q4 GDP grows at 8.6% y-o-y



Manufacturing lifts FY10 GDP growth to 7.4%

Jan-March GDP grows 8.6%, in FY10 it rises 7.4%




Src: ET and Moneycontrol, Smartinvestor.in

Investors Guide - ET

Analysts' Pick: Yes Bank, ITC, Tata Power, Container Corp of India, MphasiS

Switch to cos with smaller FII exposure

Mid-term picks | Top 5 picks | Cos with low FII Holding

Wkly Tech Analysis: Pullback likely to persist

Intermediate market uptrend under way
31 May 2010, 0440 hrs IST, Deepak Mohoni

The stock market rallied quite strongly in the second half of last week, helping the Sensex finish 2.54% or 417.45 points higher, and the Nifty 2.75% up.

Corporate Round Up: Madras Cements, Deepak Fertilisers & Petrochem Corp, NHPC, Apollo Tyres
31 May 2010, 0440 hrs IST

Madras Cements’ performance in the March 2010 quarter was adversely affected by a nearly 22.1% y-o-y fall in its realisations on a per tonne basis to Rs 2,778 in its key cement division.

We will double the number of stores to 60 in next 5 yrs: Shrikhande, CEO, Shoppers Stop
31 May 2010, 0440 hrs IST, Supriya Verma Mishra

Currently, we have 30 stores and we are planning to open at least 18 more stores in the next 24-30 months. In the next five years, we will double the number of stores to around 60. We’ll also expand our presence to 25 cities from the current 13.

Pharma cos shows the improving trend in their growth
31 May 2010, 0440 hrs IST, Kiran Kabtta Somvanshi

Good sales in the domestic market and a recovery in the US market, the largest pharma market, have been the major contributor of the companies’ performance.

Fixed income instruments that guarentee capital and returns
31 May 2010, 0440 hrs IST

With the equity markets going through troubled times, traditional fixed income instruments again catch investor’s fancy as they guarantee both the capital and returns.

Investors should go for large-cap equity schemes
31 May 2010, 0439 hrs IST, BAKUL CHUGAN TONGIA

Though launched in ’95, Birla Sun Life Advantage has been overtaken by its new siblings. Investors looking for outstanding returns can look for other large-cap equity schemes.

Investors should increase weight of small banks' stocks
31 May 2010, 0439 hrs IST, Karan Sehgal

While some of the large banks are grappling with spike in bad assets, their smaller regional peers boast of high asset quality.

Bull's Eye: Yes Bank, ITC, Tata Power, Container Corp of India, MphasiS
31 May 2010, 0439 hrs IST

JP Morgan initiates coverage of ITC with an `Overweight’ rating and a target price of Rs 307.

Deccan Chronicle Holdings' paying record makes it an attractive buy
31 May 2010, 0438 hrs IST, Rajesh Naidu

What is attractive for investors is media stocks didn’t move much even though their financial outlook looks robust.

Src: Economictimes

Stock and Market Views

TECHNICAL ANALYSIS: Index Outlook: End of correction?
The keystone of technical analysis is the belief that news flow is only incidental and stock price movements are governed by the twin forces of demand and supply. This fact was borne out yet again by the movement in equity markets this ...

STOCKS: Hindustan Unilever: Buy
The Hindustan Unilever (HUL) stock has been the sole exception to the re-rating enjoyed by consumer companies over the ...

STOCKS: Sun Pharmaceuticals: Buy
Better-than-expected financial performance, promising outlook for its domestic and international formulations business and the possibility of resumption in manufacturing at Caraco's site by the end of this year make Sun Pharmaceuticals ...

STOCKS: SAIL: Hold
Investors can consider holding on to steel major SAIL, whose massive size in terms of production capacity, raw materials and cash, coupled with low levels of debt and a robust domestic market for its products, makes for a compelling case to ...

STOCKS: NIIT: Buy
Investors with a two-year horizon can consider taking exposure to the stock of NIIT, a training solutions provider for individuals and corporates, given the broad-based recovery in all its key segments ...


TECHNICAL ANALYSIS: Consider bear-put strategy on Nifty
The Nifty rollover figures this time around have been on the lower side, lower than even its previous three-month and six-month averages. The looming uncertainty in global financial markets and the short squeeze witnessed in the last two days ...

TECHNICAL ANALYSIS: Go short in RNRL
RNRL (Rs 52): The stock has been in a downtrend for the last nine months, though it witnessed a pull back rally in the last ten days. As long as it stays below Rs 76, the outlook remains negative. The stock now finds crucial support at Rs ...

TECHNICAL ANALYSIS: Pivotals: Reliance Industries (Rs 1,033.8)
It was an extremely volatile period for Reliance Industries in May as the stock spiked to Rs 1,093.6 and then crashed towards our lower medium-term target of Rs 966. The short-term trend in the stock is down since the May 13 peak of Rs 1,093. ...

TECHNICAL ANALYSIS: Sizzling Stocks: Sesa Goa (Rs 373.8)
Sesa Goa turned red hot on Friday as market participants decided that the recent sell-off was excessive and Chinese demand was unlikely to wane anytime soon. The stock spiked to the high of Rs 375 on Friday to record gain of over 20 per cent ...

TECHNICAL ANALYSIS: Query Corner: Godrej Ind in medium-term downtrend
I have purchased the shares of Everest Kanto Cylinder at Rs 140 and Subex at Rs 73. What is the outlook for the above shares? J. Sadeesh kumar, R. Sandhya Lakshmi, S. ...




Heard on the Street: Local mutual fund takes fancy to Crompton

Eurozone woes to haunt markets: Analysts

Review: HTC EVO 4G mobiles

Bajaj Auto, Tata Motors top two bets for next 12 months: Shankar Sharma

Avoid buying RCom, RIL stocks: Shankar Sharma

Essar to buy Avaya's AGC Networks for Rs 206 cr

M&M net up 36% at Rs 570 cr

Strategies: Expert tips on stocks, sectors buzzing this wk

Hindalco Industries

Glenmark Pharma

GMDC

Apollo Tyres

GSFC

Weekly Watch - May 29 2010

Grasim, Everonn Systems, NTPC

Fortis Healthcare Limited

Src: Economictimes, DP blog , Businessline and etc

ET Special: The Inside story of Ambani's truce pact

ET Special: The Inside story of Ambani's truce pact

NEW DELHI: On May 26, an Airbus ACJ 320 with the call sign ‘VT-IAH’ touched down at New Delhi’s Indira Gandhi International Airport from Mumbai. Another flight, a Falcon 2000 that answered to the call sign ‘VT-AAT’, landed two minutes later. The pilots of both the jets informed their billionaire owners that they have landed safely. Outside, the day was just beginning, but the mercury in Delhi had already climbed to 38 degrees. Mukesh Ambani, the owner-passenger from the first plane, walked out of the airport in his characteristic brisk style, his mind preoccupied with the packed schedule for the day. On top of his priority list was a meeting of the Prime Minister’s Council on Trade and Industry. At the airport, Mukesh ran into Angarai Sethuraman, head of corporate affairs at the Anil Dhirubhai Ambani Group (ADAG) and a close aide to Anil Ambani. He was there to receive the owner-passenger of the second jet: Anil Ambani. Suddenly, Sethuraman was face-to-face with his old boss. Mukesh, chairman of India’s largest private sector company, Reliance Industries (RIL), calmly walked up to Sethuraman, shook hands and asked him warmly, “How are you, Sethu?” That small gesture travelled quickly through the political and business circles of the Capital, where the news on Monday that the Ambani brothers have decided to end their six-year-long acrimonious battle and to “collaborate” had been received with surprise bordering on scepticism. Even though the brothers lived and worked in Mumbai, many of their battles were fought in the power corridor of Luyten’s Delhi. The Capital’s decision makers and influencers knew the bitter saga closely. It had divided them, put them in awkward spots, and in many cases, rewarded them handsomely. The fault lines of the battle divided the loyalties of New Delhi, whose importance was understood early and well by the Reliance patriarch, the late Dhirubhai Hirachand Ambani. So the city had to see for itself if there was actually a thaw in hostilities. By warmly greeting a man who had been a key figure in the rival camp’s New Delhi affairs, Mukesh Ambani sent a clear signal—he meant to stick to the agreement in spirit. Exactly a week earlier, on May 19, Kokilaben Ambani, Dhirubhai’s widow and mother of the warring brothers, had returned after a visit to the famous Shiva temple at Kedarnath in the Himalayan foothills. “This has gone too far now. The two of you have to resolve the differences,” Kokilaben is believed to have told younger son Anil, according to insiders who have heard accounts of the conversation. Anil had accompanied her on the pilgrimage along with his sister Deepti Salgaonkar. But Kokilaben had been there before and almost done that. Five years ago, she had stepped in and drew up a settlement between her two sons, who lived in reasonable harmony while her husband was alive, and had a bitter fallout soon after his death. The agreement, dividing the companies Dhirubhai Ambani had assiduously built between his two sons, was signed on June 18, 2005. Six months before that Mukesh Ambani had, during a TV interview, admitted to “ownership issues” that were in the “private domain”. That was the first public admission of disharmony that had been brewing behind the scenes since the death of Dhirubhai.

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Anil Ambani may get priority gas if RIL picks equity

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Heard on the Street: Bulls ‘short’ on Sesa Goa as they see limited upside

Bulls ‘short’ on Sesa Goa as they see limited upside

Shares of Sesa Goa rose sharply on Thursday on the back of short-covering, but traders used this pullback to build short positions on the stock, as they feel the upside is capped. On BSE, the stock gained 3.8% to close at Rs 337.45. According to analysts, the recent rise in iron ore prices will not be sustainable and is expected to decline. A majority of the broking firms have maintained a cautious view on the stock, after it tanked on the back of the fall in global commodity prices. Interestingly, over the past couple of days, an insurance major had been accumulating the stock at various levels.

Funds buy SCI on bonus share issue hope

Investors have been accumulating shares of Shipping Corporation of India (SCI) in large numbers on speculation that the company will announce a bonus share issue at its board meeting on Saturday. The ratio of the bonus issue is not known as yet. According to market sources, a state-owned mutual fund and a mid-sized private bank-promoted fund house have been buying shares of the shipmaker in sizeable quantities over the past one week. Analysts tracking the company say that the government could come up with a divestment plan for SCI shortly. It intends to sell up to a 10% stake in the shipping company. The divestment story seems highly probable as SCI needs about Rs 2,000 crore over the next two years to fund its expansion plan, analysts said. Shares of SCI ended 1% higher at Rs 159 on the BSE on Thursday.

FIs bet on deregulation, lap up oilcos

Of late, some institutional investors have been buying shares of state-owned oil companies such as ONGC and Oil India ahead of the meeting of the Empowered Group on Ministers (EGoM) in the first week of June, when oil price deregulation could be discussed. Investors are betting that the government could arrive at a decision to deregulate oil prices, if not entirely. An institutional broking firm owned by a bank is rumoured to be recommending these shares, though a official there denied this. A broker attributed the resilience in shares of Oil India on Thursday despite fourth-quarter results falling below expectations to such speculation. Some market participants said the recent purchases of these shares by institutional investors are part of their ‘trading bets’.

Contributed by Harish Rao, Shailesh Menon & Nishanth Vasudevan

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Persistent Systems

IFCI

NHPC

Tata Tea

Bharat Forge

Redington India

Tata Motors posts FY10 net profit, beats forecast

TRADING DESK



Src: ET, DP blog and etc

Know a Personality and Web

Daryl Guppy

Daryl Guppy is founder and Director of Guppytraders.com Pty Ltd. He is an active private position trader trading equities and associated derivatives markets. His most recent book is The 36 Strategies of the Chinese For Financial Traders. He is the author of several books including Share Trading and Trading Tactics and Bear Trading and Chart Trading (Also availabe in Chinese as ) and Trading Asian Shares and Market Trading Tactics and Better Trading and Better Stock Trading (Also available in Italian as Lo specialista del Trading.) Snapshot Trading examines short term trading strategies. (Available in Chinese early 2008) Trend Trading has become a best seller and is available as. in a Chinese language edition published in Beijing.

He developed the Guppy Multiple Moving Average Indicator which is included in Metastock, OmniTrader and other charting programs. He delivers accredited courses for the Singapore Stock Exchange and Society of Remisiers, Singapore. He is an appointed foundation member of the Australian Government Shareholders and Investors Advisory Council. He is a regular technical analyst commentator and guest host on CNBC Asia Squawk Box.

As a technical trader he relies mainly on chart and live market information to make trading decisions. He is the publisher of a weekly Internet newsletter Tutorials in Applied Technical Analysis, which explains technical analysis techniques and shows how they are applied to current markets. There are Australian, and Asia & China and India editions of the newsletter, with each concentrating on local market solutions and trading education.

He is a regular contributor to the Sydney Futures Exchange magazine, Your Trading Edge, the US trading magazines Technical Analysis of Stocks and Commodities, Active Trader, Working Money, Bridge Trader, Australia's Shares and Personal Investment magazines, Singapore's Smart Investor magazine and The Edge business weekly and Personal Money in Malaysia. He has a regular column in China's Weekly On Stocks magazine and in Shanghai Securities News. (Chinese language only) He also contributes to Poland's Profesjonalny Inwestor and provided sector analysis on the Singapore, Hong Kong, Malaysia and Philippines markets for i-invest handbooks.

He edited and contributed new material to the Australian editions of the US classics in the International Investors Bookshelf series, The Basics of Speculating and Day Trader's Advantage and Options: Trading Strategies That Work and Trading Rules and Mastering Technical Analysis. He prepared the introduction to the Australian editions of Breaking the Black Box (M Pring), A Technician's Guide to Day Trading (M Pring) and New Thinking in Technical Analysis (R Bensignor).

He provides web content to Sanford on line brokerage, Reuters, On Line Trading systems, the Society of Remisiers, Singapore, Asiastockwatch, Telstra Big Pond Money and Quicken, Singapore. He provides charting chat room support and is co-host for the stockmeetingplace traders forum.

He trades from Darwin in the Northern Territory, of Australia, some 3,000kms from the nearest Exchange. As a result he makes full use of electronic advantages to actively trade the market and to keep in contact with other Australian and overseas traders.

He gives conference briefings for brokerage private clients. He is a featured speaker at the Australian Traders Expo, for the Sydney Futures Exchange Conference days around Australia and New Zealand, and at the Australian Technical Analysts Association annual national conferences. He was one of the speakers in the first Australian Equis Metastock seminar series. He also spoke at the On Line Trading Summit in San Diego which was web cast to traders throughout the world, and at the Technical Analysis Trading Forum in Orlando. He has spoken at trading conferences in Italy and France. He has spoken frequently at all the major Australian Stock Exchanges, and for brokerage firms.

He was one of two foreigners (Jim Rogers and Daryl Guppy) to participate in the 2005 Chinese market outlook conference in Beijing which was broadcast throughout China. He is a keynote speaker at the 2007 China Capital Markets Investment Forum. His analysis has been presented at the 2005 Palm Oil Outlook conference sponsored by Bursa Malaysia and the BYSD Annual conference in Turkey. He is a regular speaker at the annual ASEAN Rubber Conference. He is a frequent speaker at financial trading seminars in Shanghai, Beijing and Shenzhen.

He presents Certified Professional Training modules for charting and advanced technical analysis for the Singapore Stock Exchange and the Society of Remisiers, Singapore and the Hong Kong Securities Institute. He has worked with the Singapore and Australian Stock Exchanges to promote their cross trading link. He worked with Reuters Hong Kong to deliver trading and training workshops. (Read Hong Kong workshop review) He was the lecturer for the Casuarina Senior College charting course.

He also runs public trading workshops, and equity and futures brokerage sponsored seminars for clients such as National On Line trading, CMC Markets, Beijing SEEC in Australia, Kuala Lumpur, Singapore, Shanghai, Dalian and Paris. He provides in-house training support for fund managers, brokerage dealers and remisiers.

He presented several on-line workshop conferences for Pristine.com and Compuserve Investors Forum. He has appears regularly on CNBC Asia, Squawk Box as guest host technical analyst, Asian Wall Street Journal, Trading Day, Channel News Asia and ABC radio and television.

He was retained as a consultant by several Australian and Singaporean brokerages and financial portals to advise on the development of Internet based brokerage, trading and information services. He is a member of the Australian Technical Analysts Association, the Technical Analysts Society of Singapore and the International Federation of Technical Analysts.

Web

http://www.micrograam.com/

Heard on the street: Edelweiss keen on banking foray

Heard on the street: Edelweiss keen on banking foray

A private MF bets strong on Indiabulls Real Estate

Shares of Indiabulls Real Estate seem to have caught the attention of a leading private mutual fund. Going by market grapevine, the mutual fund known for its aggressive bets has been buying in the stock at different levels over the past few weeks, even as FIIs or foreign institutional investors have been exiting the stock. On the BSE, the stock rose by 3.8% on Wednesday to end at Rs 151.65, but has been an underperformer for the past few months having lost more than 10% in the past one month. As the realty sector has been one of the most pummelled sectors in recent times, analysts believe that these stocks could see a good bounce from current levels in days to come. Also, the fundamentals of the company seem attractive, as the company reported decent fourth quarter numbers.

Edelweiss keen on banking foray, awaits RBI norms

Mumbai-based financial services firm Edelweiss is eyeing a banking foray, according to investment bankers. It will be joining the growing list of corporates, including Anil Ambani-promoted Reliance group, Aditya Birla group, Shriram Capital and Religare, which have already made known their intentions to seek a banking licence. Most of the players are waiting for the Reserve Bank of India (RBI) to come out with a fresh set of guidelines that would allow new private players in the banking sector after which they are expected to approach RBI for a banking licence.

Overseas acquisition buzz lifts Aqua Logistics

Mumbai-based logistics and supply chain company Aqua Logistics has been witnessing a sustained accumulation by funds and HNIs. It has gained over 30% in the past one month on the back of acquisition talks. According to market grapevine, the company is looking to acquire a company in Thailand in liquid gas and in Indonesia for coal chartering. The acquisitions are expected to allow Aqua to increase its geographical presence and compete with multinationals. The stock closed at Rs 451, up over 2% from the previous close. The company came out with an IPO early this year for purchasing specialised equipment, expansion of offices and funding-proposed acquisition, among others. It has recently announced acquisition of three companies in Hong Kong through its wholly-owned subsidiary Aqua Logistics HK. As an external service provider, Aqua services include multimodal transportation, contract logistics, warehousing and project logistics. When contacted, MS Sayad, VC, Aqua Logistics said that the talks are at a preliminary stage and nothing has been finalised yet.

Contributed by Harish Rao & Reena Zachariah


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Markets may see flat-to-negative opening

Deccan Chronicle

Jyothy Labs

DB Corp

SBI, Dena Bank, Man Industries, Kotak Mahindra Bank

Hindustan Unilever Limited

Tata Power Limited

Edelweiss Capital

Kaveri Seeds

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Tata Steel posts a hefty Rs 2,009-cr loss in FY10 /

Tata Steel posts loss in FY10, better than forecast

Mahindra to acquire 55.2% stake in Reva


BHEL Q4 net jumps 42% to Rs 1,910 cr

Stock Analysis: Opto circuits

Result analysis: BHEL

Zensar Tech zooms 8% on bonus issue





Src: All Leading Business Websites.

Sensex falls below 16,000 to 3-month low

Sensex falls below 16,000 to 3-month low

MUMBAI: India's main stock index Sensex fell below 16,000 points for the first time in more than three months on rising foreign fund outflow as Europe's debt woes hit risk appetite.

At 2:41 p.m., the 30-share BSE index was down 2.9 percent at 15,994.12 points, with all of its components falling.

At 2:38 pm, National Stock Exchange's Nifty was at 4797.05, down 146.90 points or 2.97 per cent. The index touched a low of 4795.15 and high of 4946.60 in trade so far.

It had last been below 16,000 on Feb. 11. The 50-share NSE index was down 3 percent at 4,796.50.

BSE Midcap Index was down 2.96 per cent and BSE Smallcap Index moved 3.12 per cent lower.

Amongst the sectoral indices, BSE Metal Index fell 4.84 per cent, BSE Capital Goods Index declined 2.98 per cent and BSE Auto Index fell 2.95 per cent.

Reliance Communications (-6.32%), SAIL (-6.22%), Hindalco (-6.15%), Ambuja Cements (-5.49%) and IDFC (-5.22%) were amongst the top Nifty losers.

Sun Pharma (2.09%) was the only gainer.

Market breadth was negative on the NSE with 2430 losers against 508 gainers.

European markets continued to witness pain over debt-crisis issue plaguing Europe. DAX fell 2.45 per cent, CAC 40 was down 2.88 per cent and FTSE 100 declined 2.27 per cent.

Sensex, Nifty break key levels; all sectors butchered

World stocks sink on renewed Europe fears

Rupee at 8-month low; shares, euro losses hurt

Check out how new issues are faring in the market

Src: ET and Moneycontrol.com

Back to the Bearish Ways

The markets are likely to open with a downward bias on continued international weakness. The US markets tumbled Monday with the Dow giving up all but 5 points of gains registered Friday during a fury of short covering on the options expiry.

After trading in a narrow range for much of the day, the Dow Jones Industrial Average tumbled 127 points, the S&P 500 lost 14 points to 1074 and the NASDAQ shed 15 points at 2214.

The late swoon indicated those investors’ fears about Europe's credit crisis and tighter rules on Wall Street are still running strong. Financials led the decline on a day when the street refused to take cognizance of the 7.6% rise in existing home sales.

The euro was under pressure during the session as the market weighed news that the Bank of Spain bailed out a regional savings bank. The 1.1% rise in Dollar Index, however, did not prevent the Crude and Gold futures to move higher 17 cents and $ 17.90 higher respectively.

The bullish fervour seen in the morning trades in our markets could not hold for the day as bears came back in the afternoon to snatch the initiative away from the nascent bulls. The Nifty managed to cling on to just 13 points of gains, from the 98 points seen at one point.

Barring Reliance Infra, which saw some additional position build up, the rest of the clan saw positions being pruned as investors took advantage of the god sent rally to prune positions.

Our stated view was also the same.

Expect the Nifty to take support around the 4850 level. If the 4832 level breaks, it will not augur well and we could see a cascade of selling by risk managers in that eventuality.

Autos, banks, metals, realty still look weak. As the settlement draws near, the options are becoming cheap and times match the stop loss of a trader. Switching to options during the last two days of the settlement is protective and also gives you more bangs for the buck. Ask your RM to understand how you can hedge your portfolio or use options to trade.

Technical Picks – Stocks

Recommended Action for Alstom Projects is Buy and for Pantaloon Retail Futures is Short on rises

Weekly Market, Sectoral and Stock Perspective – Technicals

Markets resumed their intermediate downtrend as they slided lower this week.


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Infosys Technologies Annual Report 2009-2010

Reliance Industries

India Telecom

Karur Vysya Bank

GVK Power and Infrastructure

Bharat Forge

Divi's Labs

StanChart sets IDR price band at Rs 100-115 each

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Ambani Bros: From Recrimination To Reconciliation

Market cheers 'harmony' among Ambani brothers

Ambani peace a positive for groups, shareholders: Analysts

Sensex may scale 18K-mount by year-end: Citigroup

PM sees 5-6% inflation by Dec, 8.5% growth this fiscal

Illiquid stocks spring back to life




Src: Economictimes.indiatimes, HDFCSEc, DP blog and etc

Ambani brothers end war but agree to compete

Replace all non-compete agreements with a ‘simpler pact' on gas-based power generation.

Our Bureau

Mumbai, May 23

In a move that will change the competitive landscape between the Ambani scions Mukesh and Anil, the brothers have cancelled all existing non-compete agreements between their groups, drawn-up during the Reliance re-organisation in 2006.

A new and “simpler” non-compete agreement has instead been formalised relating only to gas-based power generation, said identical statements issued separately by the two groups on Sunday.

The agreement cancelling earlier non-compete agreements (except in the matter of gas-based power production) was signed between the Mukesh Ambani-led Reliance Industries Ltd (RIL) and Anil Ambani led-Reliance ADA Group companies on Sunday.

The new agreement opens up sectors that were hitherto out of bounds for either groups, such as telecommunications and the financial sector for the older brother Mukesh.

Gas-based power generation continues to be off-limits for RIL up to March 31, 2022. An appropriate exception has been made in respect of RIL's captive gas-based power plants, the note explained.

For younger brother Anil, the doors are now open to sectors such as oil and gas and petrochemicals.

COURT FALLOUT?

The latest development comes two weeks after the Supreme Court had ruled on the gas-pricing dispute between the two brothers. The apex court had directed the Mukesh-owned RIL and the Anil-owned RNRL to renegotiate a gas supply agreement within six weeks of the court judgement and to report the agreement to the court within eight weeks.

However, there is no clarity on whether the latest agreement between the Ambani brothers is an off-shoot of the apex court-directed negotiations and merely a precursor to a new gas sharing agreement which the Supreme Court has mandated.

The latest statement did say that RIL and Reliance Natural Resources Ltd (RNRL) will expeditiously negotiate gas supply arrangements in accordance with the orders of the Supreme Court. “We hope to conclude these negotiations very soon,” the note added.

Further, the new non-compete agreement will eliminate the possibility for further disputes between the two groups, “on matters relating to the scope and interpretation of the non-compete obligations,” the note added.

The agreement has removed road blocks for each of the two groups to expand in new areas, an industry-watcher agreed, adding however, that it may be too early to say if RIL would be interested in any of the areas where ADAG is already present.

In the past, the two brothers have fought over Mr Anil Ambani's efforts to acquire South African telecom company MTN and more recently, over the gas supply arrangement between Mr Mukesh Ambani's RIL and Mr Anil Ambani's Reliance Natural Resources Ltd.

A few years ago, there was another public spat when Mr Anil Ambani protested against a 2,000-MW captive plant that was proposed for the RIL-promoted Haryana Special Economic Zone. He had then cited violation of the non-compete agreement between them, while the RIL camp held that the plant was only incidental to the SEZ business. RIL has a captive power plant at its new refinery in Jamnagar too.

POWER: Truce or war?

After Dhirubhai Ambani's death in 2002, his empire was re-organised between the warring Ambani scions under the stewardship of their mother Ms Kokilaben, in June 2005.

But industry watchers differ in their interpretation of the latest development, calling it variously as “a road to a truce”, and an “out-and-out war”, or a “total severing of relations”.

Some felt that there would be greater consolidation activity between the groups. “There are certain indications that point to M&A activities between the two groups, especially with Mr Mukesh Ambani showing keen interest in the telecom sector,” said Mr Kishor P. Ostwal, head of CNI Research.

Others, however, felt this was unlikely. “We think it is out-and-out no-holds barred war. It's a you-do-what-you-like, I'll-do-what-I-like situation. Only in the case of gas they are forced to have an agreement,” said another analyst.

“The settlement is positive for both the groups But what will be more interesting is when they announce the monetary component of the deal. The ADAG group especially is dry of money,” said Mr Harjit Singh Sethi, Country Head, Institutional Equity Broking at Almondz Global Securities.

There was much speculation on whether Mr Anil Ambani has conceded more, as it is easier for Mr Mukesh Ambani to enter telecom, finance (in particular) and non-gas based power, than it is for the former to enter a capital intensive industry such as refining or exploration.

The press statements from the two brothers, though, had reconciliatory overtones.

“RIL and Reliance ADA Group are hopeful and confident that all these steps will create an overall environment of harmony, co-operation and collaboration between the two groups, thereby further enhancing overall shareholder value for shareholders of both groups,” the note said.

The boards of directors of both RIL and Reliance ADA Group companies have given their green signal to the latest agreement.

Ambanis end non-compete pact in reconciliation bid

India's billionaire Ambani brothers took a step towards reconciliation of their long-running feud on Sunday, ending non-compete agreements in a step they hoped would lead to cooperation between the two groups.

Both groups said they hoped to reach a conclusion soon in a gas supply agreement between Reliance Industries (RIL) and Anil's Reliance Natural Resources that had been at the heart of their dispute.

"RIL and Reliance ADA Group are hopeful and confident that all these steps will create an overall environment of harmony, co-operation and collaboration between the two groups, thereby further enhancing overall shareholder value for shareholders of both groups," both companies said in statements.

The announcement comes weeks after the Supreme Court ruled in Mukesh Ambani's favour in a bitter dispute over gas pricing that had made headlines, riven India's richest family and raised questions about the influence of big business on government policy.

On Sunday, Reliance Industries and Anil's Reliance ADA Group said they had agreed to cancel all existing non-compete pacts which the groups had signed in 2006 and entered into a new and simpler non-compete pact only for gas-based power generation.

"If you weigh the positives and negatives, this is more positive for Reliance Industries than R-ADAG group, because this gives Reliance an opportunity to look into expansion in other areas, which they were not allowed to do earlier," said S.P. Tulsian, an independent investment consultant.

"You can't rule out the possibility of Reliance entering in sectors such as telecom," adding the Reliance shares are expected to open up on Monday, in the wake of this development.

The two brothers, who both live in Mumbai but had not been on speaking terms during their dispute, inherited their business empires from their father Dhirubhai Ambani in 2005.

Mukesh got the jewel - Reliance Industries, which has interests in oil and gas exploration, petrochemicals, infrastructure and textiles. Anil got the telecoms, power and financial services businesses.

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