The Hindu Business Line : Reliance Ind slumps on growth concern

Mumbai, July 25 Shares of Reliance Industries Ltd (RIL) slumped close to 7 per cent, a day after the company reported a 13 per cent growth in net profit for the quarter ended June 2008.

Such a large single-day fall in RIL shares was not witnessed in the recent past.

The stock enjoys a maximum weightage of 15.84 per cent in the Sensex; this had its impact on the benchmark index, which closed more than 500 points lower on Friday.

Profit Growth

Analysts attributed the steep slide in the company’s stock to several reasons.

One, the results were not very encouraging. Though the results were better-than-expected, it was not in line with the quarterly net profit growth that the company has been reporting in the last couple of years, said analysts.

“With crude prices going down now, the company’s profitability will be affected,” said Mr Vishwas Agarwal, an independent analyst.

The concern is that the core refining business of the company is under pressure, said Mr Gaurav Dua, Head of Research, Sharekhan Ltd.

The other fear is that that the company might be vulnerable to new levies, with talks that the Centre is being pressured by certain sections to consider a “windfall tax” on oil companies.

In part, the stock’s fall was due to the general decline in the market itself: “In the rally of the past few days, stocks such as these had seen huge gains; and it is these stocks that fall the most when the market declines,” said an equity analyst.

In intra-day trade, RIL touched a low of Rs 2,132.25 on the BSE, marking a fall of 7.55 per cent but closed a tad higher at Rs 2,147.35, which worked out to a fall of 6.90 per cent from the previous day’s close.

Profit booking

Both on the NSE and BSE, Reliance was the top-traded stock, clocking a combined turnover of Rs 1,987.95 crore. There was considerable profit booking on the counter, said brokers. The RIL group company Reliance Petroleum, which is setting up a new refinery adjacent to the existing RIL refinery at Jamnagar in Gujarat, fell 4.52 per cent.

The downward movement in the oil & gas companies was witnessed across the sector as the BSE Oil & Gas index fell 5.08 per cent.

The largest public sector oil and gas company ONGC closed 4.31 per cent lower.

Reliance Natural Resources Ltd, an Anil Ambani company, fell by 3.34 per cent.

However, the negative impact was the least on the share prices of the public sector oil marketing companies.

Indian Oil Corporation and HPCL fell by less than half per cent each, whereas BPCL gained by 1.12 per cent.

More Stories on : Stocks | Outlook | Reliance Industries Ltd | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Reliance Ind slumps on growth concern

Electrosteel Casting gains on investment plans

Indiabulls, Emkay, JM Financial report dip in consolidated net

LIC accumulates stake in 22 Sensex cos