India Shares Gain 0.9pc on Reliance

MUMBAI: Indian shares rose 0.9 per cent Monday, powered by Reliance Industries after the energy major's offer to buy a controlling interest in US-based bankrupt petrochemicals company LyondellBasell.

Investors cheered the bid, which comes when global asset prices are cheap after the financial crisis. A deal would catapult Reliance into the ranks of top petrochemical makers such as Saudi Arabia's SABIC, Germany's BASF and US-based Dow Chemical Co.
Sources have put the value of the cash offer at around $10 billion to $12 billion, which would make it India's second-biggest ever foreign takeover. In 2007, Tata Steel bought Corus for $13 billion.

"In deals like Tata-Corus, the valuations were phenomenally high. But when a company is down and out, it is going to be cheap," said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services, who has bought the stock for his clients. Reliance, which has the heaviest weight in the main index, climbed 3.3 per cent to Rs2,195.50, its highest close in more than five weeks.
Vaibhav Sanghavi, director of Ambit Capital, said Reliance's comfortable balance sheet and synergies also helped the stock.

The 30-share BSE index firmed 0.93 per cent or 158.33 points at 17,180.18 levels, its best close in more than a month. Two-third of its components ended up, while in the broader section gainers led losers in the ratio of 1.3:1 on relatively lower volume of 348 million shares.

The index, which has gained 8.1 per cent this month after shedding 7.2 per cent in October, is up more than 78 per cent in 2009, fuelled by foreign portfolio inflows of more than $15 billion.

Telecom stocks declined as a tariff war in the sector intensified after Tata Teleservices extended its per-second billing scheme to roaming calls. Top mobile operator Bharti Airtel fell 4.5 per cent to Rs275.80, while rival Reliance Communications shed 1 per cent to Rs172.05.