Investors shying from stocks of Reliance cos

Sharvari Patwa
Sagar Bhadra

Mumbai, Aug. 29 The dispute between the Ambani brothers, which is scheduled for a final hearing in the Supreme Court on October 20, seems to have kept investors away from both the Reliance groups’ stocks.

The average daily traded volumes of Reliance Industries (RIL) and Reliance Natural Resources (RNRL), for instance, have dipped by 23 per cent and 44 per cent respectively from July to August, according to National Stock Exchange data, whereas total trading activity on NSE declined only marginally over the same period when average daily traded volumes were down by 4 per cent.

The Ambani brothers — Mukesh and Anil — have been locked in a commercial dispute over the sharing of natural gas from RIL’s Godavari Basin.

Every stock related to the Ambani brothers has seen a drop of at least 20 per cent in daily traded volumes over the July-August period.

In August itself, RIL’s average daily volumes fell from 5.25 crore shares (between August 1 and 3), to as low as 25.30 lakh shares on the August 24.

The corresponding average volumes of RNRL were 3.03 crore shares, which fell to around one crore shares.

Investors are avoiding the counters of the companies and are using the opportunity to invest in other stocks that are performing better, said Mr Ketan Malkan, Vice-President (Broking and Dealing), India Infoline. Mr Vishwas Agrawal, an independent analyst, said that investors had begun to avoid the stocks after the court hearings in June itself, and that this trend intensified after the annual general meetings of RNRL and Reliance Power and the recent media campaign by the ADAG Group. “Nobody knows what is going to be the outcome of this dispute so investors seem to be taking a precautionary stance by not trading at these counters,” Mr Malkan said. In fact, many brokers said they were not recommending these stocks to their clients.

The pack of Reliance stocks has not participated during the past few rallies, said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets. Even the big investors are avoiding these scrips, she said.

This is underscored by the fact that while the Sensex has risen nine per cent during the past two months, Reliance Industries was marginally down by 0.9 per cent and RNRL down by almost six per cent for the same period (data calculated as on August 28).