RIIL shares now head the other way

RIIL shares now head the other way

Mumbai: In a U-turn, the share price of Reliance Industrial Infrastructure Ltd (RIIL), an arm of India’s largest conglomerate Reliance Industries Ltd (RIL), is down 8.7%, hitting the lower circuit five times in past 10 trading sessions. The stock had soared for more than a month since mid-September, gaining about 456% in just 25 trading sessions.

The latest reverse trend follows on the heels of a 22 October story in Mintthat noted the absence of any company-related developments that were triggering the rise. Indeed, there appear to be no new announcements by the company that explain the reversal.

Prior to the last 10 trading sessions, RIIL’s stock price had consistently hit the upper-circuit on 25 trading sessions, which resulted in some Rs1,500 crore additional value to RIL, the parent company controlled by Mukesh Ambani, currently the wealthiest individual Indian.

RIL directly holds 46% stake in RIIL. In addition, a group of financial services firms with equity links to RIL, owns a significant stake in RIIL, though they are listed as non-promoter entities in the company’s latest stock pattern available on the Bombay Stock Exchange website.

The stock, which began its roll from Rs496 on 12 September, hit a high of Rs2,760.75 during mid-morning trade on 19 October. The market capitalization of RIIL rose from Rs749 crore to Rs4,168.7 crore, during the period from 12 September to 19 October, up 456% in about a month’s time.

On Friday, the shares fell Rs118.90, or 4.3%, to close at Rs2,646.15. Their 52-week low was Rs357.30 on 8 March.

The RIIL stock hit the upper circuit (5%) on 22 October, then the lower circuit (-5%) in the two sessions that followed on 23 and 24 October. Again the stock went up by 5% each to hit upper circuit for another three sessions on 25, 26 and 29 October, continued by a relatively flat growth on 30 October. However, in the last three trading sessions in the week that passed, the scrip (stock) lost about 14%, hitting the lower circuit in all these ­sessions.

Circuit filters are a ceiling used to prevent excessive gain or loss on stock prices or on indices, to protect investors.

“We cannot comment about how our stock performs in the market," a spokesperson of RIL told Mint in October. “We have no control over it. It could be led by speculation. There is no new development that is awaited in this company."

The stock price movement of RIIL beginning 22 October suggests that “a group of speculators are driving the stock up or down, on select sessions," said an analyst at a domestic brokerage, who didn’t want to be ­identified.