RIL-RNRL verdict: Experts analyse mkt impact of judgement

It's a big win for Mukesh Ambani in the high profile legal battle with younger brother Anil. In a severe blow to the Anil Ambani group seeking cheap gas from Reliance Industries, the Supreme Court ruled that the government will have the last word on pricing.The three-judge bench of the apex court, headed by Chief Justice KG Balakrishnan, ruled in favour of Reliance Industries. The court held that the government’s production sharing contract (PSC) was supreme and hence the Ambani family MoU was not binding.
The court also directed Reliance Industries Limited (RIL) to initiate negotiations with Reliance Natural Resources Limited (RNRL) within six weeks to arrive at a sale agreement within the framework of government policy. The PSC dictates a price of USD 4.2 per mmBtu while RNRL wanted gas at USD 2.34 per mmBtu.
RIL gained over 2.5% in the markets reaction to the judgement while RNRL plunged nearly 23%. Both were among the top traded scrips today. Among other ADAG companies', Reliance Power was a major loser on the Nifty and was down nearly 9%.
The bears however continued their stranglehold that they have had on the markets all through the week. The Sensex plummeted 4.5% to 16,769.11 and Nifty lost 4.9% to 5,018.05. The Nifty has shed 260 points through the week. Rising debt concerns in Eurozone countries like PIIGS (Portugal, Italy, Ireland, Greece, and Spain) have been weighing on global markets, though IMF provided financial support to Greece.
Overnight, US stocks tumbled the most in a year on concerns that Europe's debt crisis will halt the global recovery. The weakness was widespread for the entire session as participants showed an aversion to risk. The Dow ended down 347.80 points, or 3.2%, at 10,520.32, after being down as much as 998.50 earlier, its biggest intraday drop on record. 
In an interview with CNBC-TV18, Vetri Subramaniam, Head – Equity Funds, Religare MF; SP Tulsian, sptulsian.com and Sandeep Parekh, Former ED, SEBI and Visiting Associate Faculty, IIM-Ahmedabad analysed the impact of the Supreme Court judgement on the markets and gave their perspective on the road ahead for markets.

Posted in: