The Hindu Business Line : Ratio talk props it up

AFTER a long wait, the merger of Burroughs Wellcome with GlaxoSmithKline Pharma is all set to happen. However, the main concern for the market is the merger ratio between the two companies.

If the market talk is to be believed, the ratio is likely to be 5 shares of Glaxo for 3 shares of Burroughs Wellcome. Dealers said, at this ratio , the deal is likely to be in favour of the shareholders of Burroughs Wellcome.

On these expectations, the shares of Burroughs Wellcome gained 13 per cent at Rs 865.45 on the BSE, while the shares of Glaxo edged up 3.15 per cent at Rs 637.30.

Privatisation hopes spark

The demand for the shares of Reliance Energy (formerly BSES) is again coming from several FIIs. A leading foreign broking firm has put a `buy' on the company's shares even at these levels.

The recommendation was despite the equity dilution after the recent preferential issue. The stock price of the company is trading at all-time levels.

The main reason for the bullishness is the privatisation of Karnataka distribution. The broking firm feels that the privatisation process should be completed this year and the announcement could come just after the Lok Sabha election.

Dealers said the main beneficiary of this privatisation is likely to be Reliance Energy.

On Wednesday, however, the stock closed at Rs 769.75, down marginally by 0.26 per cent, on the BSE with volumes of 2.08 lakh shares; on the NSE, the stock closed at Rs 774.20, up 0.15 per cent with volumes of 3.25 lakh shares.

Primary boom hits secondary

The huge oversubscription in the various public offers may have improved the market sentiment, but it has led to liquidity crunch in the secondary market.

If the market talk is to be believed, several high net worth individuals have blocked their money in the public offers, which has led to low activity in the market. This has also resulted in some of them selling part of their holdings in the market.

Dealers said the stock market is likely to remain weak till these investors receive either the shares or money.

Virendra Verma

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