Why Is Reliance’s Stock Falling and Will It Rise After Bonus Share Issue? Mukesh Ambani’s RIL Analysis

Why Is Reliance’s Stock Falling: Discover why Reliance Industries’ stock is experiencing a decline, with factors like Middle East oil price fluctuations and foreign investor exits. Learn what experts say about the future of Mukesh Ambani’s company, including potential price rises after the bonus share issue.

Why is Reliance’s stock falling, will Mukesh Ambani’s company’s price rise after the bonus share issue? The Indian stock market has been declining for the last three days. Even heavyweight large-cap stocks could not escape its grip. Billionaire businessman Mukesh Ambani’s Reliance Industries stock has also fallen by about 7.6 percent in the last three days. On Thursday, it closed at Rs 2,813.95 with a decline of 3.95 percent. It has come down more than 12 percent from its all-time high.

Why is Reliance’s stock falling?

A large part of Reliance Industries’ business is Oil to Chemicals (O2C). Currently, due to geopolitical tensions in the Middle East, oil prices are witnessing huge fluctuations. This is also affecting Reliance shares.

Till the June quarter, foreign investors’ stake in Reliance was 21.75 percent. Now foreign investors are selling in India to turn to markets like China. Its impact is also being felt in stocks like Reliance.

Why Is Reliance’s Stock Falling: When can Reliance see a boom?

It is also quite interesting that Reliance was going through more or less similar conditions during Navratri last year as well. This Navratri, Reliance’s stock has fallen below its long-term 200-DMA (Daily Moving Average). It also came below 200-DMA around Navratri 2023.

But, RIL’s stock spent barely four trading sessions below the 200-DMA, and soon climbed back up on October 30, 2023. After this, the stock saw a strong rally of 35.3 percent and made a new all-time high of Rs 3,218 on July 8, 2024. Reliance investors would be hoping for a similar performance again.

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What is the brokerage’s opinion on Reliance?

Both foreign and domestic brokerage firms have a very positive stance on Reliance Industries. CLSA has maintained an ‘Outperform’ rating on RIL with a target price of Rs 3,300. At the same time, Nomura has also given a ‘Buy’ rating with a target price of Rs 3,600; Bernstein has raised RIL’s target price to Rs 3,440 per share.

In March 2024, Goldman Sachs said that in the event of a bull run, a target price of Rs 4,495 was given for Mukesh Ambani’s company. Domestic brokerage firm Motilal Oswal has also advised to buy Reliance with a target price of Rs 3,435 per share.

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RIL investors’ Diwali before time

On September 5, the board of Reliance approved the bonus issue of equity shares in a 1:1 ratio. This means that every shareholder holding 1 equity share as of the record date will be given 1 share free. This will be Reliance’s first bonus share issue in the last seven years and the sixth bonus share issue overall.