A division bench of the Bombay High Court today asked Mukesh Ambani-promoted Reliance Industries (RIL) to sell natural gas to Reliance Natural Resources (RNRL), an Anil Ambani group company, at $2.34 per million British thermal units (mBtu), which is 44 per cent lower than the price fixed by the government.
Price of RIL tumbled down by 7.48% to Rs. 2180.45, while I had bought it at Rs.2201. I thought that as sensex is down by 2.38%, which is much smaller than drop in RIL shares; the markets might have over-reacted. RIL is too big to fall due to such kind of events and it will gather momentum by the time budget is presented (6th July tentatively). One analyst said that the drop in share price is just too big as compared to the dent the actual implementation will cause to company. Another article opined that there is no way that RNRL could sell the gas to other companies & its own power projects (esp. 7000 megawatt Dadri project) are still on the drawing board. So, RIL can just deny selling to RNRL for the moment. Other thing, RIL could move to company court or supreme court; thus delaying the implementation.
On the other hand, the case on deal of RIL with NTPC is highly likely to go against RIL after the verdict against RNRL is known.
JP Morgan has recommended 'overweight' on RIL.
I intend to sell RIL after it crosses 2230 mark.
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