Nifty sheds 260 points this week; SC verdict pushes RIL higher

The benchmark Nifty witnessed significant sell-off today and broke the psychological 5000 mark in an intraday trade on global meltdown. However, Supreme Court's verdict in RIL-RNRL gas case was in favour of Reliance Industries, which supported the Nifty for holding that 5K mark. All sectoral indices were down barring Oil & gas and FMCG.

The verdict on one of the fiercest corporate battle between the Ambani brothers, Mukesh Ambani's Reliance Industries (RIL) and Anil Ambani's Reliance Natural Resources (RNRL) over the supply of gas from the Krishna-Godavari basin was out. The Supreme Court ruled in favour of RIL by 2:1.

SC judge Sathasivam declared that the brothers' MoU was not binding and that RIL and RNRL must renegotiate in six weeks. He said that the government owned all the gas assets till it reached the users. It added that Production Sharing Contract (PSC) will overwrite all the prior agreements and the MoU between the Ambani brothers is not binding. The PSC dictates a price of USD 4.2 per mmBtu.
 
Reliance Industries gained over 2.5% while Reliance Natural Resources plunged nearly 23%; both were top traded scrips today. Other ADAG companies' shares fell 3-10%. Reliance Power was the major loser on the Nifty, down nearly 9%. While commenting on judgment, Anil Ambani said, "We respect the judgement of the honourable Supreme Court. RNRL has currently no plans to file a review petition in the Supreme Court."

Overall the markets remained in bears' control for the whole week - the Sensex plummeted 4.5% and Nifty lost 4.9%.. Rising debt concerns in Eurozone countries like PIIGS (Portugal, Italy, Ireland, Greece, and Spain) have been weighed on global markets, though IMF provided financial support to Greece.

Richard Gibbs, Global Head at Macquarie Securities said, "The catalyst is once again been ongoing ructions and the issues with the Greek debt crisis and now the fear of contamination and contention with other Southern euro area-economies including Portugal and Spain. The announcement by US rating agencies about their concerns, jurisdictions has really fanned the flames."

There were talks that European banks have stopped lending on Thursday. He said, "Banks are certainly holding a lot of the Greek debt paper and that is a concern obviously-if there is a default or restructuring. The debt restructuring is effectively is a quasi default in the eyes of most investors. That does raise the prospect of further capital write down and calls upon the pressures on the capital basis of the banks and financial institutions at the time when they have just come through."