RIL-Facebook deal lifts markets

Following Monday’s oil price crash in the U.S. futures market, the benchmark indices in India had mirrored the global panic on Tuesday. Rather, the price for West Texas Intermediate (WTI) crude for June expiry contracts had corrected, and traded in the range of $10.3–14.05 per barrel. In its release, RIL notified that Facebook Inc. had signed binding agreements for an investment of ₹43,574 crore by Facebook into Jio Platforms (RIL’s wholly-owned subsidiary) and a next-generation technology company whose wholly-owned subsidiary, Reliance Jio Infocomm, provides connectivity platform to over 388 million subscribers. According to Ajit Mishra, vice president, research at Religare Broking, Wednesday’s rally was led by RIL. “Today’s surge was largely in response to the Reliance-Facebook deal and we may again see the selling pressure emerging at the higher levels,” says Mishra. Mishra opines that going forward, the Covid-19 updates combined with signals from the earnings front would dictate the market trend from here on. The RIL-Facebook, in the opinion of Deepak Jasani, head of research at HDFC Securities, is a positive for RIL coming under the current trying times. Jasani is of the view that the two can combine their unique strengths using their network of users, share their data, develop applications (apps) for social, digital payments, gaming, shopping, flight and hotel bookings, etc. Jasani also highlighted that RIL’s stock price reaction on Wednesday, was marginally higher than the 12.2% rise noted in August 2019 post the announcement of a bigger deal with Saudi Aramco. While RIL was the instrumental in driving the market in the positive zone, and the stock has recovered over 55% in a month, Wednesday’s gain values the conglomerate at ₹8.62 lakh crore.