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Our Bureau

Mumbai, Sept. 11 Shares of Reliance Industries slid more than four per cent on Thursday breaching Rs 2,000 level as crude continued to fall, leading to bearish sentiments on Dalal Street too.

The stock opened at Rs 2,071.50 and touched an intra-day low of Rs 1,983 before closing at Rs 1,997.60, losing over 4 per cent.

The benchmark index Sensex fell by 2.31 per cent on Thursday on negative global cues. Reliance is the most weighted Sensex constituent, at 14.67 per cent in the index.

While retail investors have also shed holdings in the stock, it is mainly FIIs who have been active sellers today, said a dealer.

The apprehension that RIL’s revenues would be affected due to the cooling down of crude, and talk of a possible levy of export tax or ban on petroleum exports from the company’s Jamnagar refineries contributed to the selling sentiment for the stock, said Mr Alex Matthew, Head-Research, Geojit Financial Services.

RIL has dipped below the Rs 2,000 level for first time in nearly two months.

While the immediate trigger for the fall in the stock price has been the fall in crude, another factor is the political pressure on government to impose a windfall gains tax which would affect RIL, said Mr Anil Advani, head of research at SBICAP Securities.

Another major concern about the stock is that the refining margins have been under pressure for some time now.

Globally, refining margins are coming down as crude consumption is declining. This is one of the fundamental reasons affecting the stock, said Mr Lalit Thakkar, Director, Angel Broking Ltd

A report by India Infoline for the Reliance Q1 results had said that the margins were a tad below expectations, referring to the gross refining margins (GRM) of the company. The refining segment might witness pressure on GRMs in the near-term but will sustain over long-term averages.

With RPL slated to commence operations before the scheduled date of December 2008, revenue contribution from the refining segment will increase considerably, said the report. KG D6 is all set to commence production from 2H FY09. This will provide further trigger to earnings growth. On the other hand, the pending RIL-RNRL court case and the issue of windfall tax would remain overhangs in the near-term, said the report.

More Stories on : Petroleum | Stocks | Reliance Industries Ltd

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