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).

Also Read

→ RIL-RNRL: What SC verdict could mean for investors

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

→ Book profits in RNRL: Sandeep Wagle, APTART Technical Advisory Services

→ 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

→ RIL, RNRL gas dispute all set for court finale

→ Avoid Reliance Industries and RNRL: Deepak Mohoni

→ Book profits in RNRL: Sandeep Wagle, APTART

→ 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.

More @ Asia shares to drop on Greek woes

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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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Spare some trouble

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Idea Cellular

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Src: Economictimes, DP blog

Wall St slips on European debt worries; Dow down 225 pts

n the US markets it was the worst percentage slide since February & has put the S&P 500 at a one month low and just above its 50-day moving average.

Volatility spiked to more than a two-month high as a result. The CBOE volatility index spiked more than 20% to about 24.

Stocks were under pressure for the entire session on worries that the European debt crisis will spread. The market was buzzing with a fresh round of speculation that Spain might be next to need a bailout.

Also Read See how Asian markets are doing RSS feed for news Click here

At closing bell, the Dow shed 225.06, or 2%, to close at 10,926.77. The S&P 500 fell 2.4%, while the Nasdaq lost 3 percent.

Investors shrugged off a pair of encouraging US economic reports. Pending-home sales rose 5.3% in March, slightly better than expected, while factory orders jumped 1.3% in March, significantly better than the 0.1-percent drop expected.

European stocks erased their 2010 gain on concerns that Greece's debt crisis will spread through the region. The sovereign debt concerns led that caused Greece's Athex Composite to fall 6.7%, Spain's ibex to drop 5.4%. Portugal's general index gave up 3.8%.

The dollar hit a one-year high against the euro as investors worried that Greece may not pull off its austerity measures and that debt problems could spread to other countries.

Strength in the dollar and a sour tone in the stock market led to an over 2% drop in the CRB commodity index, its worst loss in three months.

Oil was one of the weakest commodities as it recorded its largest single-session loss in nearly three months. June contracts cracked 4% to USD 82.74 per barrel.

Gold was also lower after it gave up an early gain. The yellow metal slipped over a percent. The base metal slump continues with copper down to 7000 dollar per tonne levels.

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Daily News Roundup - May 5 2010

Worldly worries

Ambuja Cements

BGR Energy Systems

HDFC

Cadila Healthcare

Reliance Capital

Madhucon Projects

Infosys Technologies

Phoenix Mills

Cairn India

GVK Power and Infrastructure

Indiabulls RealEstate

Maharashtra Seamless

JSW Steel

Src: ET and DP blog and Moneycontrol.com

Europe debt fears hit mkts, Euro at year low

Europe debt fears hit mkts, Euro at year low


LONDON: European equities dived and the euro hit a new one-year dollar low on Tuesday, failing to win support after eurozone finance ministers agreed a 110-billion-euro (145-billion-dollar) Greek bailout.

In late morning deals, the London stock market slid 1.51 percent, Paris lost 2.04 percent and Frankfurt shed 1.36 percent. Elsewhere, Madrid tumbled 3.26 percent and Athens slumped by 3.71 percent.

In foreign exchange trade, the European single currency nosedived to 1.3088 dollars on Tuesday, plumbing the lowest level since April 28, 2009.

"Markets do not seem greatly impressed by the launch of the Greek rescue plan," said Unicredit analyst Marco Annunziata.

"The 110-billion-euro program... barely met expectations, without generating any positive surprise, and this probably helps explain the lukewarm reaction."

Over the weekend, eurozone finance chiefs approved an unprecedented three-year package of loans for Greece, struggling to shake off a crippling debt and deficit burden.

"The EU/IMF bailout of Greece provides enough funding for the next 12 months or so," said VTB Capital economist Neil MacKinnon.

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"However, the ability and willingness to bail out another eurozone fiscal miscreant is politically difficult," he added, hinting at other fiscally-challenged nations like Ireland, Spain and Portugal.

Of the 110 billion euros (145 billion dollars) to be made available to Greece, the eurozone would provide 80 billion and the International Monetary Fund 30 billion.

And in a policy U-turn, the European Central Bank agreed to accept Greece's junk-rated government bonds as collateral for loans.

In return, the Greek Socialist government will have to impose harsh austerity measures, as it seeks to slash its public deficit from nearly 14.0 percent of output last year to less than 3.0 percent by the end of 2014.

"The ECB's decision to suspend minimum collateral requirements for Greek bonds helps alleviate an imminent banking crisis but the ECB might find they end up doing this for other 'club Med' bonds," added MacKinnon.

More @ http://economictimes.indiatimes.com/markets/global-markets/Europe-debt-fears-hit-markets-Euro-at-year-low-against-dollar/articleshow/5890251.cms


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Govt for RIL cutting gas output for Petronet sake; RIL says no

Nifty ends below 5150 on weak global cues

HCL signs $500 mn IT deal with US pharma giant MSD




Src: EConomictimes

China may 'crash' in 9-12 months: Marc Faber

China may 'crash' in 9-12 months: Marc Faber


SINGAPORE: Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

The Shanghai Composite Index has failed to regain its 2009 high while industrial commodities and shares of Australian resource exporters are acting “heavy”, Faber said. The opening of the World Expo in Shanghai last week is “not a particularly good omen”, he said, citing a property bust and depression that followed the 1873 World Exhibition in Vienna.

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong on Monday.

“The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

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An index tracking Chinese stocks traded in Hong Kong dropped 1.8% on Monday, the most in two weeks, after the central bank raised reserve requirements for the third time this year.

The Shanghai Composite has slumped 12% this year, Asia’s worst performer, as policy makers seek to rein in a lending boom that’s spurred record gains in property prices. China’s markets are shut for a holiday on Monday.

Copper touched a seven-week low and BHP Billiton, the world’s biggest mining company, fell the most since February on concern spending in the world’s third-largest economy will slow and after Australia boosted taxes on commodities producers. Rio Tinto, the third-largest, slid as much as 6 %.

Chanos, Rogoff

Faber joins hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff in warning of a crash in China. China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month.

As much as 60% of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fuelled bubble in China may trigger a regional recession within a decade.


More @ http://economictimes.indiatimes.com/markets/global-markets/China-may-crash-in-next-9-12-months-Marc-Faber/articleshow/5887630.cms





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Heard on the Street: Tata Motors skids as US hedge offloads shares

Domestic fund goes ga-ga over Graphite India

An aggressive fund manager of a large domestic fund house is going bananas over Graphite India, a manufacturer of graphite electrodes.

According to the grapevine, this fund manager has bought a sizeable chunk of the stock recently, as he is betting on better prospects for the industry. On Monday, the stock, which has risen 16% in a month, closed at Rs 102, down almost 1% from the previous close.

According to analysts, growth of graphite electrodes, a key input in steel production through the electric arc furnace (EAF) route, will increase rapidly compared to EAF steel production in the next couple of years as steel manufacturers are stocking up graphite electrode inventory.

Further, the company is also expected to reap strong labour cost advantages as compared to its peers in the developed markets.

Tata Motors skids as US hedge offloads shares

Shares of Tata Motors snapped a three-day winning rally on Monday, ending at Rs 855.55, down almost 2%. According to the grapevine, a US-based hedge fund, whose Asia operations are run by a maverick fund manager, has offloaded a portion of their holding it had accumulated recently.

Brokers said the fund booked profits partly after the stock rose 6% last week compared to Sensex’s drop of 0.5%. The stock’s trating, which was a sell at most brokerages till recently, has been upgraded to a buy due to improvement in operations of Jaguar and Land Rover, which has been the cause of concern for most investors.

(Contributed by Apurv Gupta)

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Daily News Roundup - May 4 2010

Mumbai derailed, markets back on track

Biocon

Vijaya Bank

Subros

Indian Bank

Ashok Leyland Ltd

Src: Economictimes, DP blog and etc

Stocks Views

Indian Bank

Andhra Bank

Ashok Leyland Ltd

Tech Mahindra

Siemens

Idea Cellular Results

Glenmark Pharma

HDFC Q4 profit up 26% at Rs 926 cr

JSW Steel Q4 net profit at Rs 611 cr




Src: DP blog and Business-standard

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TECHNICAL ANALYSIS: Index Outlook: Uneasy lies the market
The Greek tragedy continued to cast its pall of gloom over financial markets last week. Stock prices across the globe crumbled on Tuesday on S&P downgrading Greek sovereign debt rating to junk status. Indian equities were relatively ...

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STOCKS: GlaxoSmithKline Pharma: Hold
Shareholders with a two-three-year investment horizon can retain their exposure to the stock of GlaxoSmithKline Pharma (GSK Pharma). A strong first quarter performance, planned launches from the company's product pipeline and the parent GSK ...

IPOS: Jaypee Infratech — IPO: Invest at cut-off
Investors with a penchant for risk can consider the initial public offer of infrastructure developer, Jaypee Infratech, a subsidiary of the listed Jaiprakash Associates. A unique combination of infrastructure and real-estate development, ...

IPOS: Satluj Jal Vidyut Nigam — IPO: Invest at cut-off
Investors with a long-term horizon can subscribe to the initial public offering from the hydro power generation company, Satluj Jal Vidyut ...

TECHNICAL ANALYSIS: Pivotals
RIL moved in line with our expectation, reversing lower from the intra-week peak of Rs 1,092 to achieve our short-term target of Rs 1,025. A short-term down-trend is currently in progress from the April 7 peak. Third wave of this move has ...

TECHNICAL ANALYSIS: Query Corner: RNRL trading above critical support
I am holding Reliance Natural Resources Ltd (RNRL) purchased at Rs 85. Please advise the long and medium-term outlook for this company. Rahul Gupta, Kumbesh, C. Mohandass, ...

TECHNICAL ANALYSIS: Sizzling Stocks: Cholamandalam DBS Finance (Rs 125.3)
Cholamandalam DBS Finance began the week on a relatively sedate note at Rs 101. The fireworks came much later, on Thursday when the stock closed 16 per cent higher. The rally continued on Friday to take the stock to the intra-week peak of ...

TECHNICAL ANALYSIS: Stock Strategy: Consider shorting Apollo Tyres, Bharti Airtel
Apollo Tyres (Rs 70): After hitting its all-time high at Rs 82.5 in April earlier, the stock has been witnessing a steady decline in price. The stock faces major support at Rs 47 and resistance at Rs 76. Only a close above Rs 76 would change ...


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India Telecom 3G Update

Biocon

India Cements

Mahindra Holidays and Resorts

CESC

IDFC Ltd

Jaypee Infratech IPO Review

IDBI

Polaris Software

Canara Bank

Firstsource Solutions

Bharat Electronics

Madhucon Projects

Ashok Leyland

Everest Industries

Exide Industries Limited

Src: Economictimes, Businessline, DP blog and Valuenotes etc

2200 firms may go MNC way by 2024: PwC

2,200 firms may go MNC way by 2024: PwC


EW DELHI: India may overtake China as the largest source of new MNCs from the emerging markets, with over 2,200 domestic firms forecast to open overseas operations over the next 15 years, says a PricewaterhouseCoopers report.

According to the report titled the Emerging Multinationals, the competitive landscape is set to be transformed over the next decade as Indian and Chinese multinationals lead the way in seeking new markets outside their home markets.

"India is expected to produce the most new multinational companies, overtaking China as the emerging world's largest source of new multinationals. Over 2,200 domestic companies are projected to open operations outside over the next 15 years (between 2010 and 2024)," the report says.

Driven by the rapid pace of globalisation and revolution in information and communications technologies, the number of companies from the emerging markets choosing to set up operations abroad has increased in the past five years.

The report suggests this trend is expected to continue over the next 15 years, as new multinationals from emerging economies rise in prominence on the global economic stage.

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"It is encouraging to know that India will replace China as the largest source of new MNCs in the emerging world from 2018 onwards. The key drivers for this are the relative increase in both investment intensity as well as openness that the domestic economy offers," PwC India leader for markets and industries Jairaj Purandare said.

India and China would also be joined by an array of companies from Singapore, Russia, Malaysia and South Korea in terms of setting up MNCs.

According to the report, some of these new MNCs would become international powerhouses and would require services all over the world; for example, to support their IT and telecom networks.

PwC report says more and more new MNS are moving straight into the developed economies as opposed to setting up their first foreign operation in a neighbouring emerging market.

The global consultancy major used econometric techniques to project the number of new multinationals arising from a sample of 15 emerging economies over the next 15 years.

The countries analysed are --Argentina, Brazil, Chile, China, Hungary, India, Malaysia, Mexico, Poland, Romania, Russia, Singapore, South Korea, Ukraine and Vietnam.

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As Greece falters, fears stretch around the world

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NSE revises lot sizes of F&O scrips w.e.f. Apr 30

NSE revises lot sizes of F&O scrips with effect from April 30, 2010.

SEBI had advised exchange to standardize lot size for derivative contracts on individual securities once in every 6 months as per circular no. SEBI/DNPD/Cir- 50/2010 dated January 8, 2010. In pursuance to the revised methodology mentioned in the SEBI circular, NSE proposed to carry out revision of market lot for derivatives contracts.

For full list of revised lot sizes, click here...

Src: ET and Moneycontrol