Reliance to Invest $1.15 B in Pioneer Natural

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
24 Jun, 2010
New York City

Stocks in Mumbai traded lower. Wholesale price index rises by 0.6% for the week. Vishal Retail rose after entering into a deal with TPG. NTPC disqualifies L&T tender bid. National Stock Exchange begins futures trading for copper and zinc.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai traded lower. Wholesale price index rises by 0.6% for the week. Vishal Retail rose after entering into a deal with TPG. NTPC disqualifies L&T tender bid. National Stock Exchange begins futures trading for copper and zinc.[/R]

The Sensex index in India decreased 25.70 or 0.14% to 17,730.24 and CNX Nifty index fell 25.65 or 0.48% to 5,297.50. Among the Sensex 30 stocks, 9 rose and 21 fell.

On BSE trading, 1,504 stocks advanced, 1,337 declined and 104 were unchanged. Banking, IT and auto stocks fell. Reliance Industries turned negative.

Rupee edged lower 13 paisa to Rs 46.30 against one dollar.

The wholesale price index increased 0.6% to 301.3 from 299.5 for the previous week. For the year ending in the week, average inflation surged 17.6% compared to 5.61% in the same period a year ago.

Reliance Industries Ltd, India’s largest company by market value, has agreed to pay $1.15 billion to buy a stake to fund the drilling costs of Pioneer Natural Resources Co’s shale gas assets in the U.S. This is the second such purchase by Reliance in three months.

“Reliance will pay $266 million up front and fund $879 million of drilling costs in a joint venture in the Eagle Ford formation,” Pioneer said today in a statement. The deal gives Reliance a 45% stake in 212,000 acres of shale properties.

Reliance aspires to build a significant position in the shale gas business, said Reliance’s Mukesh Ambani while addressing shareholders meeting on June 18.

NTPC, the state-owned power utility, has disqualified L&T bid on technical grounds for supply of 11 sets of super critical boilers. NTPC said the Rs 20,000 crore quote was made by L&T’s subsidiary L&T Power, which has no expertise in the manufacture of super critical power equipment.

NTPC is likely to call for new tenders as the earlier tender had received only two offers. Disqualification of one offer, made the tender invalid.

National Spot Exchange Ltd has announced its plan to launch 15 commodities under E-Series for developing a “cash” or “investment” segment in commodities.

Commodity exchanges are generally known for providing a hedge instrument for protection against price risks. But they do not provide an instrument for investment where retail investors can park their funds with a view to enjoying price appreciation. In order to cater to this need, the market has to develop and launch investment products in commodities and create a niche for commodity market investors, said Anjani Sinha, MD & CEO of NSEL in Kolkata yesterday.

The exchange is all set to launch contracts such as E-Copper and E-Zinc to add to the already existing contracts of E-Gold and E-Silver.

The World Bank’s total financial commitment to India’s development agenda is set to touch $9.3 billion by the end of the bank’s fiscal year ending June.

“The total expected lending this year till June 30 would include $2.6 billion of interest free credits from the International Development Association and $6.7 billion in the form of long-term, low interest loans from the International Bank of Reconstruction and Development,” said World Bank Country Director in India Roberto Zagha, while addressing a press conference in New Delhi yesterday.

Gainers & Losers

Bank of Baroda fell 3.1% to Rs 689.05 after turning ex-dividend for a dividend of Rs 15 per share.

Cable Corporation of India Limited surged 19.8% to Rs 31.40 after the company marked its entry into real estate with a Rs 1,000 crore investment plan. The company is launching a new project on its erstwhile factory premises, which has now been relocated to Nashik.

Edelweiss Capital rose 1.8% to Rs 524.25 after the company''s board recommended a 5-for-1 stock-split and 1-to-1 bonus.

Essar Shipping Ports & Logistics Limited fell 1.5% to Rs 89.65 after the company is planning to raise $250 million through foreign currency convertible bonds.

Godrej Properties fell 7.3% to Rs 608.40 after reports the company''s project in Mumbai is set for launch in January next year.

HCL Technologies Limited dropped 4.5% to Rs 356.50 after the promoter company, HCL Corporation said it will sell close to 1.5% stake in the open market today.

Jet Airways India rose 1.1% to Rs 541.70 after the company received various proposals to develop its land in Bandra-Kurla Complex in Mumbai.

Kotak Mahindra Bank Limited dropped 2.2% to Rs 765.90 after the Dutch financial services group ING was selling its entire 3.07% stake in India`s Kotak Mahindra Bank, to raise up to $173 million, in a block deal, media reports said on Wednesday, citing sources.

Punjab National Bank rose 1.1% to Rs 1,062 after the bank said it will buy out the stakes of its joint venture partners in the life insurance and insurance broking businesses.

Raymond rose 1.9% to Rs 219.15 after the company has decided to exit its home retail business to focus more on the accessories and apparel business.

Reliance Industries Limited fell 0.2% to Rs 1,055.50 after the company struck a $1.36 billion deal to develop shale assets of Pioneer Natural Resources, boosting its presence in the U.S. shale gas sector.

Shriram EPC Limited added 1.1% to Rs 266.20 after the company won two projects of Rs 83 crore from Urban Improvement Trust, Kota.

Vishal Retail Limited advanced 1.5% to Rs 68.00 after the company''s board approved the terms of an agreement with private equity firm TPG VW in accordance with the debt restructuring.