RIL shares rose 9.7%, in stark contrast to broader market which tanked 1.7% over tensions in Hong Kong
In intraday trade, the RIL scrip touched a high of ₹1,302.5 a share, gaining as much as 12.09%, its highest since 18 May 2009
Shares of Reliance Industries Ltd (RIL) surged 9.72% on Tuesday, witnessing their biggest jump since February 2017, after its chairman and managing director Mukesh Ambani announced the group’s plan to sell a 20% stake in its oils-to-chemicals business to Saudi Aramco.
The sharp jump in RIL shares was in stark contrast to the broader market, which ended the day 1.7% down, as turmoil in Hong Kong and Argentina spooked investors, already on edge over the US-China trade war.
The benchmark 30-share index, Sensex, fell 1.66%, or 623.75 points, to close at 36,958.16 points, while the 50-share Nifty slid 1.65%, or 183.80 points, to end at 10,925.85 points.
Following major announcements at RIL’s annual general meeting on Monday, including the company’s plans to become a zero net-debt company by March 2021, several brokerages have raised their target price for RIL and upgraded the stock. The stock gained for the third consecutive session and added nearly ₹1 trillion to investor wealth.
In intraday trade, the RIL scrip touched a high of ₹1,302.5 a share, gaining as much as 12.09%, its highest since 18 May 2009. So far this year, it has risen 13.7%.
RIL plans to sell a 20% stake in its flagship chemicals and refining business to Saudi Aramco in a deal valued at $15 billion, amid plans to cut its massive debt and secure an assured supply of crude oil to its twin refineries in Jamnagar. In addition, RIL will raise $1 billion from BP Plc, which will acquire a 49% stake in RIL’s petro-retailing business.
The broader markets were, however, dragged down following global cues. Global markets, especially Hong Kong, fell as pro-democracy protesters brought the city’s airport to a standstill on Monday. Argentina’s peso as well as equities sank after voters rejected President Mauricio Macri in primary elections.
Among Asian markets, the Nikkei fell 1.1%, while Hang Seng fell 2.1%. European markets FTSE 100 and CAC40 were down 0.4%, while Dax declined 0.7%. Argentina’s S&P Merval index slumped 48.3% on Monday, while S&P Merval Argentina Index dropped 49%.
Back home, auto stocks were hammered, after data from auto industry body Society of Indian Automobile Manufacturers, showed India’s passenger vehicle sales in July fell 31%, its steepest drop in two decades. Car sales fell 36%, while truck and bus sales fell 26%. Shares of Mahindra & Mahindra Ltd declined 6.1%, Eicher Motors Ltd fell 5.3%, Maruti Suzuki India Ltd dropped 4.7%, Hero MotoCorp Ltd lost 2.1%, and Bajaj Auto dipped 1.3%.
Investors were also disappointed after the government did not announce any measure to exempt foreign investors from the increase in surcharge on the super-rich. The dominant sentiment among investors continued to be that of caution amid the sharp decline in vehicle sales in July and rising geopolitical tension, following the removal of Jammu and Kashmir’s special status.
“Global crackdown due to political uncertainty in Argentina and Italy impacted our market. Domestic market is floating on a hope that the government will come out with supportive measures as indicated in the meeting with finance minister. Till measures are implemented, the market will react based on economic data, which continues to be weak," said Vinod Nair, head of research, Geojit Financial Services Ltd.
Expectations of a roll-back of the higher surcharge on foreign portfolio investors (FPIs) drove Sensex to a 900-point rally on Thursday and Friday last week.
However, finance minister Nirmala Sitharaman gave no such indication at a meeting with FPIs on Friday.