Thursday, October 8, 2009

Reliance Industries Sell on rise


I have radically different view on RIL bonus.

This is a deadly blow for Indian Stock Markets. Look at the sequence of events -

RPL merged with RIL - increase in equity shares
RIL issues 1:1 bonus - increase in supply of shares

Xbonus the share will languish sub 900 levels or below that for quite sometime. It has already underperformed broader sensex and nifty for last 1 year and is not going to go up in the near future. In my view RIL is a good buy only after a year or so not before !!

With its heavy weight age on both the NSE and BSE will under-perform due to the decision of RIL to do all the above ;-( With RIL not supporting Indian Stock market cannot scale new heights in a hurry ! Other shares do not have strength to make good for the pull down by RIL.

Love to hear any logic which is against the above views.


Intelligent Investor

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SP Tulsian of said the announcement came as a welcome surprise. He said that the move was acalculated one. “The Reliance family has about four million share holders of which 3 or 3.5 million are common shareholders. I think this is the capitalizing on winning the confidence of the RIL shareholders family because this is now the support mobilization at all levels by both the brothers whether this is the shareholders or of the bureaucracy or the judiciary or maybe analysts etc, so basically this seems to be a calculated move on the part of RIL that okay this has been due or a long overdue demand so lets award them with 1:1 bonus.”

Jigar Shah Senior Vice President at Kimeng Sec India said given that this year was a consolidation year for the company as earnings from its refining business were lower and the company’s overall earnings growth would be subdued, the bonus was a good incentive for share holders to retain their shares and reward share holders who have been with the company for the longer term. He said that the stock would now see a shorter term boost however, he added, “I don’t think this will have any more than temporary sentiment impact.”

“We are maintaining our target of Rs 2050 for the year and we will review it after the Q2 earnings and also what happens with the ongoing case.”

Amitabh Chakraborty, President – Equity, Religare Securities said the 1:1 bonus was totally unexpected. “In my mind, what has happened is that there was a negative sentiment attached to the treasury stock sale because normally that gives negative signals. But now this is a positive signal. Bonus is always taken very positively by the retail side of the market. So, I think this bonus announcement will compensate and I think retail will be quite enthused with this bonus issue.” He expects the market to be enthused by the news in trade tomorrow.

from Money