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Explained: Why Reliance shares slipped on trading day after the AGM

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Shares of Reliance Industries Limited (RIL) opened lower on the stock exchange on Friday, a day after the company’s 44th annual general meeting (AGM).

As of 12:30 p.m., Reliance Industries Limited (RIL) was trading more than 2.5% lower on the National Stock Exchange (NSE) at Rs 2,099 per share. Shares of the company started to fall after the AGM began yesterday. As the AGM ended after market hours, Reliance shares fell more than 2.5 percent.

RIL price movement in the stock market was expected to improve today, as President Mukesh Ambani made major announcements including an investment of Rs 75,000 crore in investment initiatives. green energy over the next three years.

However, the company’s shares continue to trade lower on Friday.

INADEQUATE AGM ANNOUNCEMENTS?

Analysts say price movement on the day of the AGM is not an indicator of how investors or the stock markets perceive the announcements. In fact, it’s not unusual for the company’s shares to remain weak or fall over the next few days.

It can be noted that the evolution of prices in the stock market depends on many factors, and it was not only the announcements of the AGM that had an impact on the RIL share price. For example, many investors would have recorded profits while some may be looking to unwind their long positions before the expiration of the June series of derivatives.

INFLATED EXPECTATIONS

Few analysts have indicated that investors have high expectations of the AGM and some may have been disappointed.

Deepak Jasani, head of retail research, HDFC Securities, told livemint.com that the stock price reaction to the AGM announcements may be explained by the “buy to buy” phenomenon. expectations and sell according to current events “.

He also noted that the misplaced expectations of some investors also played a role in the temporary disappointment. The negativity of RIL stocks should therefore continue for a short time before stabilizing.

It can be noted that Reliance shares have risen over the past six weeks and this could be a reason why many shareholders recorded profits leading to weakness. While the green energy initiatives Reliance plans to invest in have been applauded by stakeholders, analysts believe the move will bring long-term benefits rather than an instant boost.

The plan to focus on green power may take some time, but the underlying long-term benefits are likely to be good, analysts say. Simply put, Reliance stock remains an ideal and solid option for long-term investors.

SAUDI AFFAIR ARAMCO, NEW SMARTPHONE

One of the reasons RIL’s shares weakened after the AGM was due to shareholder disappointment over the $ 15 billion deal with Saudi Aramco. While Mukesh Ambani has said the deal will be done this year, some shareholders are unhappy the deal has yet to be sealed.

Read | Reliance AGA 2021: Saudi Aramco President to be RIL Board Member

Another reason that has disappointed analysts and shareholders is the fact that more details have not been announced on the “ultra-affordable” JioPhone Next which was jointly developed with Google.

Only the launch date has been disclosed but little has been shared on the specs and the price is still a mystery.

It can be concluded that the announcements made at the AGM had no immediate effect on RIL’s position on the stock market. The stock is trading lower primarily due to profit making and an already high valuation. As mentioned earlier, the brokerage firms have approved the title for the medium to long term.

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