Judgement day: The rise of RIL

Today's major news

Gemini Communications buys Rosy Blue Wireless; the stock falls by 3.09%

Bank of India Q4 net profit dips 47.2% yoy; the stock slides 5.60%

JSW Steel April crude steel production up 20%; the stock declines 3.07%

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Global signals

European stocks fell on the fifth straight day following the hefty sell off on the Wall Street and increasing concerns about a severe debt crisis in the euro zone. At the time of writing of report, FTSE 100 was trading lower by 0.55%.

All the major Asian indices closed in the negative territory on the second consecutive day. SGX Nifty closed 59 points lower.

US stock futures signal strong opening on the Wall Street after falling sharply in the previous session. Investors will eye April's US non-farm payrolls data, consumer credit data for March and unemployment rate for the month of April.

Indian indices

Indian indices continued its southbound journey on the fifth consecutive session. The global weakness and Supreme Court (SC)’s judgement in Reliance Industries (RIL)-Reliance Natural Resources (RNRL) gas case decided the course of today’s trade. The market witnessed heavy sell-off all through the day and the Sensex remained choppy through out the session. However, gains in Reliance Industries helped to curb some of its losses.

The SC’s decision on the dispute between Mukesh Ambani’s Reliance Industries and Anil Ambani’s Reliance Natural Resources over the supply of gas from the Krishna-Godavari basin was out today. The Supreme Court ruled in favour of RIL by 2:1.

SC judge Sathasivam declared that the brothers' memorandum of understanding (MoU) was not binding and that RIL and RNRL must renegotiate in six weeks. He said that the government owned all the gas assets till it reached the users. It added that production sharing contract (PSC) will overwrite all the prior agreements and the MoU between the Ambani brothers is not binding. The PSC dictates a price of $4.2 per mmbtu while RNRL wanted gas at $2.34 per mmbtu.

Tracking weak world equities, the 30-share Sensex opened 48 points lower at 16939 (this was also day’s high) and then continued its heavy fall. The Nifty broke its psychological 5000 mark in an intraday trade on global meltdown. The Supreme Court’s decision in RIL-RNRL gas case was in favour of RIL, lifted RIL and that helped the Sensex to curb some of its losses. However, in afternoon session, European indices dropping to 3-month lows, heavy selling in interest rate sensitive sectors like realty and banking stock, and continuous selling in Anil Dhirubhai Ambani Group (ADAG) stocks led the Sensex to touch the day’s low of 16684. The Nifty, breaching its psychological level during the day, created panic among the investors. At closing bell, the Sensex closed at 16769 lower by 218 points. The Nifty managed to close above 5000 to shut at 5018, 73 points lower.

Market sentiment

The market breadth was extremely negative as declining stocks outdid gaining stocks over four times. Of the 2,933 stocks traded on the BSE, 2,332 stocks declined, whereas only 537 stocks advanced. Sixty-four stocks remained unchanged.

Sectoral & stock screening

Overall, bears were in firm control. Only oil & gas sector drew investors interest, with BSE Oil & Gas gaining 0.69% led by Reliance Industries. Realty and banking sectors were hit the most, with BSE Realty and BSE Bankex down by 4.32% and 3.26% respectively. The remaining sectors slipped in the range of 0.44% to 2.31%.

On gainers’ list, Indian Hotels topped the chart, up by 2.53%, followed by Asian Paints surged by 2.47% and Reliance Industries gained by 2.27%. On losers’ list, ADAG led the losers list — Reliance Natural Resources slid the most by 22.82% after Supreme Court ruled the judgment against the company, followed by Reliance Power that fell by 8.97% and Reliance Infrastructure that shed 7.01%.

Viewing volumes

ADAG company and day’s biggest loser Reliance Natural Resources saw highest trading with over 10.68 crore shares changing hands on the BSE, followed by wind turbine major Suzlon Energy (0.79 crore shares), ADAG’s power utility Reliance Power (0.73 crore shares), India’s second largest developer Unitech (0.66 crore shares) and infrastructure company GTL Infrastructure (0.53 crore shares).