Heard rumors few days back on street, few years back reliance has made private placement of 3 crore shares @1200/1300/1400 to some FII, FII is desperate to get out of this dead investment @ purchasing price. Some one dosn't want to see this free float in market, hence price are hammered when it comes close to 1100. See the range for last 8 years.
In April 2007, Mukesh Ambani and associates purchased warrants on 12 crore shares of Reliance at Rs 1400 per share. And this was an 18 month structure, but Reliance shares were trading lower than the strike price of the warrant. Mukesh Ambani could have easily walked away from the warrant, and not converted into shares, and could have easily purchased the shares from the market at a cheaper price. But if he purchased shares from market, he would have benefitted, but Reliance would not have gotten the money. Because Reliance Industries needed the money, Mukesh Ambani converted the warrants into equity shares at a loss to himself and his associates.
However, because the shares had not traded higher than Rs 1400, under accounting rules, the warrants had not been shown as "potential Dilution" in the period from April 2007 to December 2008. This meant that even though Mukesh Ambani did a favor to Reliance and converted these warrants into Reliance Shares at a loss, Reliance results in the period from April 2007 to December 2008 were deemed to "hide" the potential dilution of equity. And Reliance was fined Rs 13 crore by SEBI for this! This was an obviously idiotic move by SEBI, and yet another example of how Reliance has zero clout with the powers that be!
http://indianexpress.com/article/bu...ies-fined-rs-13-crore-by-sebi-in-shares-case/
This was public news at that point also, but everyone ignored it, because Rs 13 crores is just chump change for Reliance.
Because Mukesh Ambani had converted warrants to shares at a loss, the board of Reliance Industries compensated him with additional 12 crore of Warrants in 2009. These warrants were issued with a strike price of Rs 1100, this time for 10 years.
It is possibly these warrants that are causing price distortions in the market today, because informed investors know that if the price trades higher than Rs 1100, Mukesh Ambani can convert warrants to shares, and sell the shares.
But the reality is that Mukesh Ambani is least bothered about selling the shares! He is more interested in accumulating as many shares as possible at as low a price as possible, because he is confident about the potential of Reliance. If people want to push the stock down and keep it below the warrant conversion price, he has absolutely no issues. Once again, he will happily convert the warrants at a loss, because he knows it wont be a loss in the long term.
This is not some FII or anyone else in the picture - this is Mukesh Ambani himself!