Brokers see big push to Sensex

HOW THE OUTSIDE WORLD LOOKS AT IT

Reliance's higher weightage on the Sensex to drive the rally.

The markets expect the settlement between the Ambani brothers, Mukesh and Anil, to help push the BSE Sensex to an all-time high on Monday, and even breach the 7,000 level in the early part of the week.

The Reliance Industries scrip has a 10 per cent weight in the BSE Sensex. A 1 per cent increase in the Reliance Industries' scrip price moves the Sensex by 7.52 points.

Brokers said the Ambani announcement cleared the uncertainity that had engulfed group scrips over the last seven months. With the family dispute out of the way, the Reliance stocks would now be valued on fundamentals again, said Ambreesh Baliga of Karvy Consultants. "The Sensex may hold on to higher levels and may even touch the 7,000 level on the back of gains in the Reliance stock as it is an index heavyweight," he added.

S Mukherji, managing director and CEO, ICICI Securities, said, "It is a matter of great relief that the risk in India's largest industrial group has ended. The settlement augurs well not only for the Reliance group but also for the overall market." Stock broker Rakesh Jhunjhunwala said today's event should prove positive for the markets.

However, a section of the market felt that the recent run up in Reliance stocks had already factored in the settlement and any move from now on would purely be on fundamentals. Said Narayan S A, managing director, Kotak Securities, "The settlement issue was factored in to the stock prices of late and there might not be a huge run up now. Overall the market is expected to react positively to the announcement."

Over the last one week, the Reliance Industries scrip has surged 6 per cent o close at Rs 600.85 on Friday, outperforming the 1.82 percent gain in the Sensex in the course of the week.

Shankar Sharma, managing director of First Global, however, argued that Monday's trading could see some selling on the Reliance counter. "The last 2-3 weeks have already seen a very significant run up in the stock price, and that is largely due to the fact that the market knew of this news coming up."