The Hindu Business Line : Reliance drags indices down

THE shares of Reliance group companies went for a tumble in the bourses on Friday, after Mr Mukesh Ambani's statements confirming ownership tussles between the two Ambani brothers.

Although Mr Ambani clarified that the differences with his brother would not impact the company, as it was professionally managed, market sentiment was sharply negative.

Reliance shares dragged the index down by 63.76 points to close at 5,961.71. On a day the Sensex shed 1.06 per cent, the shares of Reliance Industries Ltd (RIL) depleted by 3.37 per cent.

The RIL scrip closed at Rs 527.15, down by Rs 18.40. Reliance Energy closed at Rs 620.70, nearly Rs 7.75 lower from Thursday's close. In fact, scrips of all four Reliance entities went on a downspin during Friday's trade.

At the BSE, RIL shares closed lower by 3.37 per cent, Reliance Energy by 1.23 per cent, Reliance Industrial Infrastructure Ltd by 5.84 per cent and Reliance Capital by 0.86 per cent.

Although a large section of the market concurs that a split in the ownership of various Reliance entities would not have an impact in the long term, the uncertainty about the future is expected to make for choppy trading in this counter in the short to medium term.

"Investors have mistaken the implications of Mr Ambani's statement. The running of the company will not be disturbed because of this tussle. In fact, only retail investors have sold their RIL shares today, institutions and FIIs are continuing to hold the scrip," said Mr Roop Chand Betala, Betala Stock Broking Ltd.

Media reports suggesting that Mr Dhirubhai Ambani did not leave a will and that, as the per laws governing Hindu succession, his widow and all four children could get equal shares of his holding, added to the uncertainty about the company.

"The ambiguity in this case is primarily in the area of what would happen if his daughters' sell their potential share of 11 per cent holding each in RIL to an outsider. Then, there could be issues of disputes for control of the boardroom. The activity on the share today primarily reflects this," said an analyst.

"In the long run, there is nothing to be worried about. In the short term, the RIL scrip may come to the Rs 510-515 level," said Mr Arvind Bhiday, Managing Director, HCG Stock & Share Brokers.

Market outlook till the end of the calendar year continues to be grim, irrespective of individual shares, say brokers. Profit booking at the 6,000+ levels and dormant activity by FIIs because of the impending holiday season are the reasons attributed to this.

The nifty also closed Friday's trade at 1,872.35, down - 1.04 per cent. Reliance, BPCL and SCI stocks dragged the index down.

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