The Hindu Business Line : Reliance Industries closes at 4-month low

Mumbai, Nov. 3 The Reliance Industries stock fell substantially on Tuesday, to its lowest close in almost four months, as it ended the day at Rs 1,820.68.

The stock fell by 5.7 per cent pulling Sensex down by more than 3 per cent.

Ahead of the court hearing of the RIL and RNRL dispute regarding the pricing and supply of gas from RIL’s Krishna-Godavari basin, investors were speculating in the stock, which led to heavy selling, said Mr Mayank Shah, CEO of Anagram Capital. “The market has been waiting for a reason for correction, and the rumours about the court case and speculation on its outcome only added to the negative sentiment.”

That the Anil Ambani group company, RNRL, saw its stock rise by more than 4.5 per cent on Tuesday, even as Reliance Industries shares slumped, indicates that investors are expecting the case outcome to be in favour of RNRL, said a broker.

RIL was also hit by reports that the Comptroller and Auditor General has set up a team to examine the expenses the company has incurred on its D6 natural gas field in the KG basin.

All this pulled down investor sentiment on the scrip, which was tepid over the past few trading sessions due to the disappointing second quarter results of the energy giant, said a broker.

Last week, Reliance Industries had reported a 6.4 per cent fall in its second quarter net profit as earnings from its refining business tumbled.

Trading volumes in the stock during the two sessions following the announcement of the results have increased substantially, said brokers.

According to a research report by HSBC Global Research, “On the positive side, management’s guidance on RIL’s investment plan and exploration success are the key catalysts, while the downside risks include an adverse outcome to ongoing litigation over gas pricing (KG D6) and continued weakness in refining and petrochemicals.”

According to the Head of Research of a Mumbai-based broking firm, the fact that some banks had been pulled up in the US last week might have indirectly led to some selling pressure in frontline Indian equity stocks.

The fall in the Reliance stock could be a spillover effect of that event as some institutions might have reduced their exposure in India to help them with the crisis, he added.

On BSE the stock has slid over 8.5 per cent over the previous week and over 16 per cent in the past one month.

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