Reliance Industries has shed nearly $50 billion (Rs 4.2 lakh crore) in market capitalization since its peak in July, as weak earnings and economic challenges weigh on the conglomerate led by billionaire Mukesh Ambani. The refining-to-retail giant’s shares have remained stagnant this year, underperforming the NSE Nifty 50 Index by the widest margin in a decade.
Market Valuation Erosion
Reliance’s market valuation dropped by Rs 50,205.1 crore, bringing it to Rs 17,61,914.95 crore. This decline came as India’s Sensex index sank almost 942 points to a three-month low, and the Nifty index fell over 1%, closing below 24,000. Heavy selling in Reliance and banking shares contributed to the broader market downturn on November 4.
Factors that led to fall in markets
The market slide is partly attributed to speculation around China’s potential economic stimulus package, which stirred concerns over its impact on Indian stocks.
Overseas investor sell-offs have created additional pressure, according to analysts, further affecting sentiment. Key stocks like Adani Ports and Reliance Industries recorded losses, though Mahindra & Mahindra and Infosys managed gains.
Earnings worries and key trends
The recent slump in Reliance shares follows its sixth consecutive earnings miss in the previous quarter, attributed to a subdued demand environment for its flagship oils-to-chemicals segment.
Despite the decline, Indian markets remain among Asia’s top performers in 2024, despite increasing investor caution amid broader market pressures.
RIL: Key developments and investor sentiment
Reliance’s annual shareholders’ meeting in August included a one-for-one bonus share issue, but left investors without updates on the anticipated listings of its telecom and retail units.
Further impacting sentiment, its telecom arm, Reliance Jio Infocomm Ltd., lost subscribers in August after a tariff increase, adding to the mixed outlook for the company.
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(With Bloomberg Inputs)
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