India's Sensex Index Gains as Ambanis Pledge End to Dispute
India's benchmark stock index advanced. Companies controlled by the billionaire Ambani brothers led gains after they said they will end a family dispute over the division of assets.
Reliance Industries Ltd., the country's most valuable company controlled by Mukesh Ambani, rose 2.7 percent. Reliance Infrastructure Ltd., the builder of a mass rapid transit system in Mumbai controlled by his brother Anil Ambani, climbed to a two-week high.
"India's on a very strong wicket and earnings growth is intact," said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai. The Ambani agreement "may boost investor sentiment."
The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 23.94, or 0.2 percent, to 16,469.55, paring an earlier advance of as much as 1.9 percent. The gauge has dropped 8.4 percent from its April 7 peak on concern the sovereign debt crisis in Europe will derail the global economic recovery.
The S&P CNX Nifty Index on the National Stock Exchange rose 0.3 percent to 4,943.95. The BSE 200 Index increased 0.1 percent to 2,092.07.
Reliance Industries climbed 2.7 percent to 1,022.65 rupees. Companies owned by Anil surged. Reliance Infrastructure jumped 6 percent to 1,048.4 rupees, while Reliance Communications Ltd., climbed 10 percent to 146.55 rupees. Reliance Power Ltd. added 11 percent to 147.9 rupees, Reliance Natural Resources soared 23 percent to 54.6 rupees, and Reliance Capital Ltd. rose 4.8 percent to 672.75 rupees.
Ambanis' Accord
Mukesh Ambani, 53, and Anil, 50, among the world's richest siblings, yesterday ended all non-compete accords reached in January 2006 and announced a new agreement barring competition in natural gas-based power generation. Their companies issued almost identical statements saying they were "hopeful and confident" of creating an "environment of harmony, co- operation and collaboration."
"The two groups now get the opportunity to invest in many more businesses which were closed to them before," P. Phani Sekhar, who manages funds for wealthy individuals at Angel Broking Ltd., said by phone from Mumbai. "Overall, the announcements are directionally positive because of the firm steps being taken toward a final truce." He didn't disclose the value of funds under management.
Market Value Tripled
The joint market value of Reliance Industries and the five Anil Ambani companies more than tripled to $97 billion from $29 billion on Jan. 17, 2006, the day before the company split, until the end of last week.
The Sensex erased most of the day's gains in the last half- hour of trading as shares of Hindalco Industries Ltd., the top aluminum producer, and Tata Motors Ltd., the owner of Jaguar Land Rover, declined. The index drop mirrored losses in Europe.
"Foreign investors are jittery that the European crisis will derail the global economic recovery," said Gajendra Nagpal, chief executive officer of Unicon Financial Intermediaries Pvt., a brokerage in New Delhi. "They'll probably remain anxious for some time."
Hindalco retreated 4 percent to 145.6 rupees. Mahindra & Mahindra Ltd., the nation's largest maker of sport-utility vehicles and tractors, fell 1.7 percent to 529.2 rupees. Tata Motors retreated 0.4 percent to 706.95 rupees, paring an earlier gain as much as 4.2 percent.
Overseas funds sold a net 7.11 billion rupees ($152 million) of Indian equities on May 20, reducing their total purchases of the stocks this year to 238.8 billion rupees, according to the nation's market regulator.
Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years earlier in domestic currency terms, as the biggest rally in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.
The following were among the most active on the exchange:
DQ Entertainment (International) Ltd. (DQE IN), a maker of video games for Microsoft Corp.'s Xbox and Nintendo Co.'s Wii titles, gained 4.5 percent to 93.25 rupees after saying it will produce a 3D animated feature film with France's Fidelite Films and Onyx Films.
Provogue India Ltd. (PROV IN), a textile maker that exports fabric to Europe and Africa, climbed 5.7 percent to 44.45 rupees, its steepest advance in a month. About 1.3 percent of the company's equity changed hands in three transactions in Mumbai trading. Buyers and sellers weren't immediately known.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.
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