The Securities and Exchange Board of India (Sebi) is now set to play a big role in investigating whether either of the Ambani brothers has manipulated the share price of Reliance Industries. It began with Anil Ambani’s dramatic charge before the company’s board meeting on December 27 that there was ‘‘more to it (the Reliance share price movement) than meets the eye’’. That statement caused stock prices to dip Rs 17 within minutes of opening last Monday, after which the board cleared the stock buyback and the price stabilised again. The Mukesh Ambani faction is livid at the charge and also wants a full investigation into what they say are well-orchestrated moves by the Anil Ambani camp that may have depressed shares prices and influenced investment decisions of Foreign Institutional Investors (FIIs). These included a slew of media leaks, dramatic resignations and curious broker research reports. Although neither side is trading direct charges, each accuses the other of using FIIs as fronts for their trading operations and each group separately denies having traded in any Reliance shares. Meanwhile, Sebi has called for trading data from the stock exchanges. What the regulator needs to examine carefully is the steady increase in the outstanding derivatives position with every fall in the stock price from November 16 (when the feud first became public) to December 21 (when the buyback was announced). The outstanding position had increased by well over a crore, before speculators scrambled to square off and it fell to a few lakh shares by year-end.
Since foreign funds allegedly had the biggest impact on stock prices, especially in the last fortnight of December, their trading activity, as available from the two Ambani factions, is worth a look. FIIs, as a group, were apparently net sellers of 15 lakh shares until December 20, when Reliance announced a buyback. Both sides agree that Janus Funds, which sold 1.04 crore shares, were the biggest sellers. Capital International is understood to have sold anywhere between 25 to 40 lakh, one Oppenheimer Fund sold 25 lakh shares (another is understood to have bought or at least held on), a Dutch Fund and the Abu Dhabi Investment Authority sold 20 lakh shares each. On the positive side, Jardine Fleming is understood to have bought anywhere between 60 to 80 lakh shares through some Participatory Note accounts. UBS (Union Bank of Switzerland) funds bought anywhere between 13 to 20 lakh and HSBC bought about 40 lakh shares. Also, Merrill Lynch Espana is understood to have bought between 12 to 25 lakh shares. As Reliance Vice-Chairman Anil Ambani has publicly expressed the suspicion of share price manipulation and as Mukesh Ambani’s side is also insisting on a detailed inquiry, Sebi should grab this opportunity to track the beneficiary investors of these FII funds, even if it involves peeling off several layers of front companies.
Back with friends
As the battle for control between Anil and Mukesh Ambani raged through the media, the former’s corporate and political friends have been conspicuous by their absence. But when it came to ushering in the New Year, Anil was back with his buddy group of industrialists, filmstars and politicians for a celebration at Goa. The difference was that he didn’t fly out to the seaside paradise on a Reliance aircraft. Instead, he was a guest of Sahara Chairman Subroto Roy, who apparently flew his friends there in his expensive, brand new private jet.
Three years after Ketan Parekh’s dalliance with media barons and their shares, this sector is back in favour, often without even a dazzling financial performance to match. Rakesh Jhunjhunwala, the biggest individual investor in today’s market, created a buzz last week by picking up a five per cent plus stake in Mid-Day. Its IPO has been lead managed by Ketan’s company in 2000-01. Deccan Chronicle’s Initial Public Offering (IPO) was also well received by investors. But the bigger excitement was over the acquisition of a stake in Dainik Jagran by The Independent group owned by Irish businessman. The buzz is expected to continue with at least three new business channels scheduled for launch in the coming months, of which two are from listed companies. The question that analysts are asking is whether there is enough of advertising money to keep these channels in business, especially as large multinational advertisers are cutting back on their ad spend. The bigger worry is that their survival needs will compromise the quality of news and analysis. The Press Council seems to have ignored large media houses selling editorial space or news. In the West, viewers are already being fooled by advertisements that take the garb of on-site news reports, which have models masquerading as reporters. As television channels compete for business, the line between genuine news and sponsor-dictated debates and analysis will get increasingly blurred.