MUMBAI, AUGUST 7: On August 3, Reliance Industries Ltd (RIL) held its first annual general meeting (AGM) after the split between the Ambani brothers. The company had announced a massive 61 per cent growth in net profit for the June quarter.
The share price was trading at around Rs 708 on August 1 and had zoomed to Rs 741 on the eve of the AGM in anticipation of positive announcements by the company.
On August 3 also, the share opened at a stunning high of Rs 759 (which in retrospect, also seems like a ramp up job). That changed when television cameras zoomed in on Anil Ambani’s presence in the second row of the meeting hall. As perplexed investors wondered what he was going to do, the RIL share went into a free fall.
The decline accelerated at Anil Ambani’s angry and emotional speech, wiping out 80 Sensex points in minutes. Market sources told us that a massive one crore shares of RIL had been sold that afternoon. We were also told that a big chunk of sales had come from the Anil Ambani camp.
On checking with a confidante of Anil Ambani, we learnt that T. Rowe Price, a US investment management firm with over $235 billion in assets under management (AUM), was a big seller. The rest of the selling was attributed to dubious market operators.
We were told some knowledgeable sources that T.Rowe Price may not have been a seller at all, because it was buying RIL on Monday and Tuesday. This large and reputed fund has been a fairly recent entrant in the Indian market and is interested in both Indian equities and commodities.
The Indian Express now has details of the sellers on August 3 and they reveal a fairly extraordinary pattern of selling. First, T. Rowe Price was indeed the biggest seller that day and we discover that it has as many as eight FII entities registered with the Securities and Exchange Board of India (Sebi). It was the biggest seller on August 3 and it got rid of a whopping 31 lakh RIL shares in a single day (See box for details).
For a reputed and bluechip fund that was buying RIL shares until the beginning of the week, its exit was massive and ferocious. But it wasn’t the only big seller either.
Two other big sellers were — Goldman Sachs Investments Mauritius, which sold a massive 19,34,000 shares and Merrill Lynch Variable Securities Fund based in Mauritius which sold 4,56,000 shares and seems to have cleaned out its entire portfolio. Kopthal Mauritius Investments Ltd, which is well known to the regulators, also sold a hefty 4,77,000 shares.
The bigger surprise however was that Reliance Growth Fund sold 1,03,740 shares and Reliance Equity Opportunities Fund sold 2,10,000 shares first and another three lakh shares later.
But this isn’t the only interesting action in Reliance equity happening at the moment. The steady conversion of GDR holdings into underlying equity and its purchase through ABN Amro account has run into a couple of crore shares.
While there was also good deal of FII buying in RIL shares on the day of the AGM, it was more widely-distributed with no concerted trends. These sudden sales are all the more curious because the RIL share price bounced back the next day.
Clearly some knowledgeable investors could have made a huge packet by pushing up the share price before the AGM and then hammering it down the next day.
What is now important is to find out who bought on August 1, 2 and sold only in the early trading on August 3.