The Hindu Business Line : ADAG stocks on downhill

Mumbai, March 24 The Anil Dhirubhai Ambani pack of stocks that were among the leaders in the December-January market rally, is also among the hardest hit set of stocks in the last month.

Reliance Capital, Reliance Communications, Reliance Energy, Reliance Natural Resources Ltd, Reliance Power and Adlabs — have all fallen heavily since February 22.

Reliance Capital has fallen 40.63 per cent, Reliance Communications has dipped 12.59 per cent, Reliance Energy has tanked 26.03 per cent, RNRL has plunged 26.47 per cent and Adlabs has plummeted 41.38 per cent from that date.

In comparison, the BSE Sensex fell 11.87 per cent and the BSE-500 tumbled 16.26 per cent during this period.

Analysts say that these stocks are high beta in nature. “If you look at the market, in the last one month it has fallen more than 15 per cent, so these stocks which rallied the most when the market was at its peak will also be the stocks that people would want to dump to book profits,” said the Vice-President of research with a broking house.

R-Power debacle

Another reason why these stocks have been hit so badly could be because of the Reliance Power listing debacle which saw the stock listing and staying below its issue price, say market men. “People were expecting Reliance Power to list at a very good price and to give them good returns because of all the hype that surrounded the IPO. But since listing day it has been downhill for the Reliance Power scrip. Due to this, a lot of people seem to have lost confidence in the ADAG stocks; and with the markets being very choppy people are playing it very safe,” said Mr Sanjay Someshwar, Sub-Broker with Ventura Securities.

The Reliance Power IPO was subscribed 72.9 times. The issue price was Rs 450 a share, but on listing day the stock closed 17 per cent below this price. Market men say investors took this as a big let down. The buy-back of Reliance Energy shares to increase its promoter’s stake might have also upset investors, said analysts.

Would all this affect the upcoming IPO of ADAG’s Reliance Infratel? It definitely will, say market watchers. “After the recent Reliance Power listing, people will definitely not give in to any kind of hype. So Anil Ambani will have to price the Reliance Infratel IPO very attractively and cautiously in order to get a good response,” said Mr Someshwar. Also, add market men, that people are a little wary of IPOs after the recent performance of the primary markets.

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