Ambani's Call Of Truce


SHARETIPSINFO >>Research Reports >>Ambani’s call of truce: Implications on the Indian stock Market


For the past few weeks, the Indian market were “terrorised” by global “insurgents”. Talking seriously, global markets had been the major players for the past 2 weeks, causing major unrest amongst investors who were keeping away or pulling out their capital from equities across the globe as the fear of yet another recession in the becoming. The double edged sword that is the EU’s bailout of Greece brings many an uncertainty and non-compliance of “rules” as exhibited by one of their co-founders.

This “second” move by the Ambani brothers, who have now gone ahead and taken out their previous deal on not competing on each others territory has given the market some precious little to cheer about. Anil Ambani’s Anil Dhirubhai Ambani group (hereafter refereed to as ADAG) of companies and RIL(headed by Mukesh Ambani) have been in the loop for a while now, especially the former as its stocks having been beaten from pillar to post for the last several months. The feuding brothers finally called a truce on what can be a big move with unprecedented gains for both. RIL, which was being overlooked by investors will be able to deploy good amount of cash following the move as will ADAG which should finally be able to see some investors. A change in sentiment is the most likely result as the two parties have largely been the mainstays of the Indian market for a while now.

The second Ambani truce, which came forward now 5 years after the one done earlier by their mother has now ended on what was a “no-compete” pact that had disallowed elder brother Mukesh from entering sectors as such as power, telecom and financial services while the younger sibling Anil, 50, was kept away from refining and petrochemicals.

News is that we might see RIL entering financial services and which would be interlinked with its existing retail business, something that looks like an excellent option to have while sources remain mum on their foray into the already packed with competition Telecom Sector.

According to the statement issued “RIL and R-ADAG are hopeful and confident that all these steps will create an overall environment of harmony, co-operation and collaboration between the two groups, thereby further enhancing overall shareholder value for shareholders of both groups”.

We say that Investors should look forward to RNRL and RIL as both look likely to gain following this move. Despite the fact the European freeze-over does not look likely to run out of gas anytime soon, the Indian market has and will respond positively for the Ambani truce.

We would also recommend for traders and investors to remain cautious because the two main factors including the “insurgents” and the “feud brothers” will make it very difficult for the market to move in either way with any conviction. The Ambani truce might be able to pull investors into themselves, but FIIs’ would continue to stay away until the boys from Europe are able to complete the bailout successfully.

It would be advisable if you trade carefully whilst diversifying your investments as the market sentiments continue to look cautious until the eventual improvement which could actually result in a significant move for the us as well. In using our recommendations, you will be able to do stock specific buying which will only add to your portfolio. We are keeping our fingers crossed, so should you.


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