India Lifts Rates; Reliance Power, RNRL Merger

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
05 Jul, 2010
New York City

Stocks in Mumbai traded lower after the central bank lifted the key interest rate on Friday. Service industry index rises to a two-year high in June. Reliance Natural Resources merges with Reliance Power. Hindustan Media Ventures IPO opens for subscription.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai traded lower after the central bank lifted the key interest rate on Friday. Service industry index rises to a two-year high in June. Reliance Natural Resources merges with Reliance Power. Hindustan Media Ventures IPO opens for subscription. Power Grid board approves secondary offering.[/R]

Stocks in India fluctuated through the day and closed lower after RBI revised key interest rates on Friday. Trading was light after major opposition parties boycotted the latest fuel price liberalization and shut down activities in the largest cities. No violence was reported.

The Sensex index in India decreased 19.51 or 0.11% to 17,441.44 and CNX Nifty index rose 11.45 or 0.22% to 5,248.55. Among the Sensex 30 stocks, 16 rose and 14 fell.

On BSE trading, 1,617 stocks advanced, 1,160 declined and 98 were unchanged.

Eight fertilizer shares rose 0.54% to 6.47% boosted by the revival of monsoon rains.

Rupee edged lower 6 paisa to Rs. 46.82 against one dollar.

In an unscheduled move the Reserve Bank of India raised interest rates on Friday evening after fuel oil was regulated by the government. The central bank increased the reverse repurchase rate by 25 basis points to 4%. The repurchase rate was increased to 5.5% from 5.25%.

“The Reserve Bank will continue to monitor the macroeconomic conditions, particularly the price situation, and take further action as warranted,” the Mumbai-based RBI said in a statement.

India’s services industry which includes software and telecommunications grew to a two-year high in June according to the survey conducted by HSBC Holdings Plc and Markit Economics.

The Purchasing Manager’s Index according to the survey rose to 64 in June from 58.2 in May.

Anil Ambani controlled Reliance Natural Resources Ltd and Reliance Power Ltd will merge in an all-stock deal worth more than Rs 50,000 crore, after the natural gas supply contract was revised with Reliance Industries Ltd.

The boards of Reliance Natural and Reliance Power met on July 4 and approved the exchange of 1 share of Reliance Power for every 4 of Reliance Natural Resources Ltd., based on the audit firm KPMG valuation.

India sold Rs 10,000 crore of bonds maturing 2017, 2022, and 2040 as planned at an auction, the Reserve Bank said in Mumbai.

Kasikorn Asset Management Co, Thailand’s biggest money manager with assets of about $16 billion, is planning to raise as much as 8 million baht selling the nation’s first mutual fund to invest in bonds of Indian banks and companies.

“The fund will invest in five state-owned and private companies like Indian Oil Corporation, ICICI Bank Ltd, and Export-Import Bank of India,” said the fund’s Managing Director Patchara Samalapa.

Gainers & Losers

Ankit Metal & Power Limited surged 9.9% to Rs 29.35 after the company said its board will meet on Tuesday, July 6, to consider issue of shares on rights basis.

Artson Engineering Limited fell 2.1% to Rs 62.75 after the company received an order of Rs 25 crore.

Ashok Leyland added 5.3% to Rs 65.80 after the company''s total vehicle sales surged 111.8% to 8,400 units from a year ago.

Consolidated Construction Consortium Limited rose 4.5% to Rs 92.95 after the construction service provider received orders of Rs 1,218 crore during June 2010.

Fiem Industries Limited surged 19% to Rs 178.00 after the company signed two agreements with Ichikoh Industries of Japan.

HT Media Limited dropped 0.4% to Rs 145.95 after a media company supported company is entering the capital market on July 5 to raise Rs 270 crore, with a price a price band of Rs 162 to Rs 175 a share.

Indsil Hydro Power and Manganese Limited surged 9.9% to Rs 82.50 after the company''s board decided to expand its facility for manufacture of low carbon silico manganese to set up a 9 MVA SAP smelter in Chhattisgarh.

Orchid Chemicals & Pharmaceuticals Limited rose 1.9% to Rs 173.25 after the company announced that it has received the tentative approval from the US Food and Drug Administration for its generic drug Gemifloxacin Mesylate tablets in 320 mg strength.

Power Grid Corporation of India Limited fell 1.4% to Rs 102.00 after the company''s board approved a follow up public offer of 20% of its existing paid up share capital.

Reliance Power Limited rose 2.0% to 178.65 after the company decided to merge with Reliance Natural Resources offering one share for every four Reliance Natural Resources shares.

Reliance Natural Resources Limited plunged 27.7% to Rs 46.00 due to unfavorable swap ratio for its merger with Reliance Power.

Rashtriya Chemicals and Fertilizers rose 6.4% to Rs 91.30 on reports the company has opened its 300-acre residential colony in Chembur, Mumbai for redevelopment.

Trent Limited gained 8.6% to Rs 1,033.00 after the company fixed July 10 as record date for rights issue.