With the Supreme Court (SC) likely to announce its judgement on the gas price tussle between Ambani brothers next week, the share price of Reliance Industries Ltd (RIL) has taken a sharp knock while Reliance Natural Resources Ltd (RNRL) witnessed a spike.
On the Bombay Stock Exchange (BSE), the share price of Anil Ambani promoted RNRL was up over 6.3 per cent on Wednesday, closing at Rs 66.25. The rise was eye catching as the broader markets witnessed a sharp fall and the benchmark index Sensex fell over 300 points on the back of worsening of Euro Zone crises.
RNRL made a intra-day high of Rs 68 on BSE.
Another of Anil Ambani company Reliance Power Ltd (RPower), which too could witness the consequences of SC order, stood firm ground. RPower rose marginally 0.03 per cent to close at Rs 157.9, even while the BSE Power index fell 1.14 per cent.
On the other hand, market heavyweight and Mukesh Ambani-promoted RIL fell 4.16 per cent, its worst decline in past few months. The fall was despite the company’s announcement of a fourth oil discovery at Cambay Basin, named Dhirubhai 47, near the coast of Gujarat. The oil find was significant as it is expected to open more oil pool areas leading to better hydrocarbon potential for the company.
The RNRL stock had gained over 5.3 per cent in the past three trading sessions, while the RIL fell nearly 6.5 per cent during the same time.
“There is some speculation going on in both Anil and Mukesh Ambani company stocks. It has been often noticed that some sort of informed buying or selling takes place in the RNRL counter ahead of any major court proceeding,” said independent equity advisor S P Tulsian.
The markets are expecting the final SC judgement on the gas dispute to be announced between May 3 to May 7. The logic is that chief justice K G Balakrishnan would pronounce the verdict during the week days before he retires on May 11.
"The verdict is expected during the first week of May and punters are willing to bet on the counter. The oil ministry recently proposed to revise the price of natural gas produced by ONGC taking $ 4.20 per mmBtu as the benchmark, to help the state-run firm break even in gas business. This move suggests, it would be difficult even for RIL to sell gas at a price lower than $ 4.2 mmBtu," said Deven Choksey, managing director at K R Choksey Shares and Securities.
The oil ministry is likely to move a Cabinet note next month for raising the price of the gas, produced by ONGC and Oil India from fields given to them on a nomination basis (called APM gas). The gas is currently being sold at $1.8.The tussle relates to supply of gas to RNRL from the D6 block in the Krishna-Godavari eastern offshore fields of RIL. The dispute landed in the SC after many twists and turns in lower courts. RIL had approached SC challenging a Bombay High Court ruling in favour of RNRL.
The Bombay HC had directed RIL to give RNRL assured supply of 28 mscmd (million standard cubic metres per day) of gas from RIL’s Krishna-Godavari basin for 17 years at $2.34 per mBtu. The gas price was 44.28 per cent lower than the price fixed by government for gas sale from the RIL block in the KG basin at $4.2 mbtu.
