Shares of Reliance Industries have tanked nearly 9% in the last six sessions, making investors jittery about the prospects of the large cap stock. Reliance Industries shares, which closed at Rs 2,417.55 on March 8, hit a fresh 52-week low of Rs 2202.30 in the current trading session, translating into a loss of 8.90% on BSE. The stock of Reliance Industries has slipped 12.47% this year and lost 7.19% in the last one year. Total 1.90 lakh shares of the firm changed hands amounting to a turnover of Rs 42.40 crore on BSE today.
Market cap of the conglomerate fell below Rs 15 lakh crore briefly as the stock hit a fresh 52 week low. At 1:07 pm, the market cap of the firm stood at Rs 15.13 lakh crore.
In terms of technicals, the relative strength index (RSI) of RIL stock stands at 33, signaling it’s neither trading in the overbought nor in the oversold zone. The stock has a beta of 1.1, indicating high volatility in a year. RIL shares are trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
FII selling
Selling by foreign institutional investors (FIIs) in Indian market in the last few days is among the key factors dragging the Reliance Industries stock lower, said analysts. During the last five sessions, FIIs have sold equity worth Rs 8,528.32 crore in the Indian market, according to NSE data. FII ownership has fallen to six years low in the RIL stock, said a report by JPMorgan.
Weak O2C segment margins
Oil-to-chemical (O2C) segment, which is Reliance’s main earnings source, have been falling as a percentage of overall revenue have fallen for the last three quarters. In the third quarter of the current fiscal, that figure fell to 65.6% from 68.5% in Q2, and 72% in Q1. The state of petrochemical margins remains a worry for the OTC segment over FY24E-FY25E, said ICICI Securities in a Q3 earnings review report.
“Downstream chemical products witnessed margin pressure with excess supply and relatively weak regional demand. Our focus remains on operating safely and reliably producing vital fuel and materials for consumers,” said Mukesh Ambani, chairman and managing director, Reliance Industries in the Q3 earnings release.
O2C business revenue of the conglomerate fell compared to the previous quarter – at Rs 1,44,630 crore, it fell short of the Q2 revenue by 9.5%.
Absence of telecom tariff hike
The absence of tariff hike in the telecom sector is putting pressure on the average revenue per user for the conglomerate’s telecom arm Reliance Jio, according to analysts. “This was a typical no-tariff-hike quarter where other parameters remained steady but relatively small to drive meaningful revenue growth,” ICICI Securities said in its Q3 earnings review report.
Negative market sentiment
Abhijeet from Tips2trade attributed the weakness in RIL stock to highly volatile market due to a potential banking sector collapse in the USA amid rising interest rates, which has resulted in a sharp fall across majority of the stocks including Reliance Industries.
“Reliance looks bearish but oversold on the Daily charts with next crucial support at Rs 2180. A close below this support could lead to Rs 2135. Strong resistance will be at Rs 2304,” he added.
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