It is said that Stock Markets work in strange ways.There are umpteen things that decide the movement of Stock Prices but if there is anything that plays a critical role in the price movement, it is News.

Corporate press releases generally form the basis of getting the lead on what the company is upto. M&A news are primarily very sensitive and can take the share price to the extremes.What we saw in the case of Bharti-MTN deal was another big M&A speculation that did not materialize.However, both Bharti and MTN saw huge fluctuations in their share price during the announcement.The direction where the stock price goes to depends on a lot of factors.Generally , if the acquisitions are somewhere aligned with the core business and are being done at fair value , the market response is positive and the share value of the company can rise.However, if the deal announcement has an element of uncertainty, then the markets do not react well and the share price take a blow.

The former happened in the case of Reliance Industries in today’s trading session.

Reliance Industries shares rose nearly four percent Monday after it announced a cash bid to buy a controlling stake in bankrupt petrochemicals firm LyondellBasell Industries.
The refining and energy exploration company hiked 3.75 percent or 79.85 rupees to a day's high of 2,205 before easing back to close 3.31 percent higher at 2,195.5 on the Mumbai Stock Exchange.

LyondellBasell Industries though a bankrupt firm has certain key factors which make the deal beneficial for Reliance.The businesses are aligned since Reliance has its own petrochemical products.With the acquisition of LyondellBasell Industries , Reliance can use its platform to distribute its petrochemical products.

Another positive factor that makes this acquisition worthwhile is the fact that Reliance has been performing reasonably well in the domestic markets.A deal like this will help Reliance make inroads into the overseas markets without the need for building a platform from scratch.

Moreover, Reliance is financially very strong and has a sizable cash reserve.It makes sense for the company to look for some inorganic growth via acquisitions.The deal would be among the biggest overseas acquisitions ever made by an Indian company.The amount offered has not been disclosed but the industry analysts estimate that the amount could be around 12 billion.

Reliance today powered the Nifty to 5100 levels.The stock should see some more action in tomorrow's trading session as well.

Share Prices react very strongly to news and today’s movement of Reliance is a testimony to that.