The Reliance Industries scrip concluded the last trading day of this fiscal with a whimper. Fall in refining margins, which form over 50 per cent of its operating income, and muted global and local demand for its finished products due to slowing growth in EU and China worked against its favour at the bourses. The stock fall continued for the tenth day.
The stock shed over 10 per cent to close at Rs 773.70 on the BSE from Rs 860.65 on March 14 when its continuous slide began against a fall of 3.75 per cent in the benchmark Sensex. According to Bloomberg, the continuous fall is the longest losing streak since 1997.
The company has also seen its weightage in the Sensex sliding to third position at 8.57 per cent below Infosys (8.78 per cent) and ITC (10.62 per cent).
Interestingly, this is the same stock which had been re-rated by a slew of top brokerages that raised the stock’s target price following the company’s third quarter results ended December 2012 showing a near 24 per cent increase in net profit to Rs 5,502 crore and the stock hitting its 52-week high.
Assistant Vice-President of Geojit BNP Paribas Gaurang Shah said: “Volumes have gone down in terms of exploration business and there is pressure in terms of new discoveries not coming on-stream production wise. The petrochemical business is also not looking up. We see a maximum upside to about Rs 870 a share from here..”
An analyst with domestic brokerage said: “The company’s refining margins have come down by $5 a barrel to $4, and its petrochemical business has also recently seen a bottoming out.
Given the significant correction in the stock, analysts are advising investors to consider accumulating the stock at lower levels rather than go on a buying spree given the risk factors.