When Apple overtook Microsoft as the most valued technology company in the world a little over a year ago, few would have projected it to climb up so fast to challenge the oil giant Exxon Mobil. But even as the maker of iPads and iPhones momentarily surpassed NYSE-listed Exxon Mobil last week, something similar is playing out back home.

Coal India, a firm which is majority-owned by the Indian government and which went public last year, has quietly pushed its way up for some time now. For the past one week, it was just a whisker behind Mukesh Ambani-led oil and gas giant Reliance Industries Ltd, in terms of market cap sweepstakes.

At the last traded market price on Tuesday, Coal India had a market value of Rs 2,44,822 crore or $53.99 billion, as against the market capitalisation of Rs 2,48,504 crore or $54.8 billion for Reliance Industries. And a few days ago, ONGC, another PSU oil and gas major, had come close to overtaking Reliance Industries.

As share prices see-sawed on Wednesday in intra-day trading, Coal India pipped Reliance Industries to become the country’s most valued firm several times during the day. At the close of trade on BSE on Wednesday, Reliance Industries market cap was pegged at Rs 2,47,129 crore($54.39 billion), as against Rs 2,51,296 crore($55.3 billion) for Coal India.

However, unlike Apple-Exxon Mobil where Apple’s shares rose to bridge the gap with the oil company, it’s the decline in the value of Reliance Industries’ share price that is largely behind the valuation gap closing in India.

One of the reasons attributed to the fall in RIL’s share price is the research report released last month by Canadian firm Veritas Investment Research, which alleged that the demerger of Reliance’s telecom business in 2005-06 created loss to the company’s shareholders. The report also raised fingers at the corporate governance practices of the demerged firm.

Reliance, which just sewed a multi-billion dollar deal with British Petroleum, has been the country’s most valued company for the past four years. On the one hand, there are pundits who see Reliance Industries underperforming in the market while others feel that the stock has bottomed out. Coal India, on the other hand, has seen its scrip rise 50 per cent in less than one year, from the issue price of Rs 245 a share.

Compared to Coal India, Reliance Industries had a much bigger stash of quarterly profits for the quarter ended June 30 which, in effect, means Coal India is trading at a higher multiple than Reliance Industries. But by that parameter, ONGC could have overtaken Reliance much before. Even for the year ended March, 2011, ONGC was the country’s most profitable firm.

However, the future crown of India’s most valued firm can well be decided not in this country but with the movement in commodity prices globally. Unlike Apple-Exxon Mobil, where the latter can potentially see the impact from crude prices in the near term and Apple share price can climb back to overtake Exxon Mobil as the company announces new products or upgrades existing gadgets in the coming weeks, in India, both contenders for the top slot are commodity players (Reliance Industries has been trying to diversify its business with entry into retail a few years ago, besides broadband and financial services in recent times).

As commodity prices in general have softened after the US rating downgrade, the eventual winner may come out of which commodity price – coal or oil – sinks faster or bounces back from here on, besides operational performance of Reliance Industries' gas business.

Another Cat-Mouse Game In Indian Banking

There are numerous such sectors where former giants are being challenged by other competitors in the market cap game. Be it TCS surpassing Infosys as the most valued IT firm or, more recently, HDFC Bank overtaking ICICI Bank as the most valued private bank in India.

HDFC Bank closed trading on Tuesday with a market cap of Rs 1,06,470 crore, as compared to Rs 1,07,755 crore of ICICI Bank. But at close of trading on Wednesday, HDFC Bank commanded a higher market cap than ICICI Bank, the country’s second largest lender (behind the PSU bank SBI) and India’s biggest private bank. HDFC Bank had a market cap of Rs 1,08,872 crore, against ICICI Bank’s Rs 1,04,921 crore.

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