Domestic financial institutions have hailed the new arrangement between two Ambani brothers which scrapped the non-compete clause included in their January 2006 agreement. These companies have large equity and debt investments in the companies of both the brothers.
Life Insurance Corporation executive director A Mohan Raj said the development is good for the domestic stock market. The reason is that the two brothers have the capacity to do any business they want to. However, it will take much time before the impact on the holding companies owned by the brothers is known. LICE has got a lot of exposure in the companies owned by both the brothers.
On the ongoing stock market volatility he said, “You have to live with the volatility in the stock market, which is caused by both domestic and international factors. A huge sum is coming from overseas into the Indian market and we can have volatility there,? he said.
A senior official of GIC Re said though the finer details of the new development is yet to be known, the patch-up was a very good sign for the stock market.
?Whenever there is a fight between the two big listed companies, its the shareholders who will suffer. Both the companies? shares have gone up after the news of the patch-up was out. For example, the fresh capital investment can happen from both the brothers and it will help grow industry and the economy of the country too.? GIC Re holds more than 50 lakh shares in each of the companies. ?The market will remain choppy until June-end. After that, it would entirely depend on the good monsoons,? the official said.
Aneesh Srivastava, chief investment officer, IDBI Fortis, said that both the brothers may be interested in expanding their business in various sectors. There was uncertainty among the investors until the problems between two brothers got resolved. The resolving of the crisis has seen their share prices move up. A large part of current volatility in the Indian stock market was due to volatile global market.