As the market as a whole tumbled on Monday, index heavyweight Reliance Industries Ltd's shares came under pressure and dropped by nearly 2%.
At 12:00 IST, the the Nifty was down 218.30 points or 1.28% at 16,881.70, and the Sensex was down 730.72 points or 1.26% at 57,259.18.
The India VIX or India Volatility Index rose over 15%. Basically, NSE calculates the India VIX to gauge how much the market anticipates volatility and fluctuations in the short term.
When the market is consistently fluctuating, you can see an increase in the volatility indicator like today. On the other side, the index slips into the red when the market is stable and less volatile.
"Nifty 50 hangs in between 52-week low (15,183) and high (18,887) whereas heavyweight stock like Reliance is trading at 52-week low. Reliance is under tight consolidation range of 2750 to 2250 for 82 weeks. It is hovering at lower band of consolidation. Its weekly relative strength index (RSI) is near oversold zone," said Kapil Shah, Technical Analyst, Emkay Global and Technical Analysis Trainer at Finlearn Academy.
Furthermore, according to news reports, data revealed that in the third quarter, foreign institutional investor (FII) ownership in the company fell to a six-year low of 23.48%. This further weighed on the negative sentiment.
In an interview with ET Now, Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services Ltd (MOFSL), said that RIL has been facing challenges lately, including a slowdown in its newer businesses and weak consumption demand.
"We have seen across the sector – be it Trent, Aditya Birla Fashion and Retail, D-Mart or Reliance Retail – growth has come down, especially in the December quarter, which was supposed to be a big quarter because of the festive season. And that is something worrisome. The summer season could improve some of the growth, especially with the launch of the new cola that is heating up the beverages market in India. We are getting a new large player entry after a very long time. That could be exciting for Reliance and the core business will continue to do well. Overall, at this valuation, we would still be positive, although, as I said, the stock has not been performing in line with our expectation, but the outlook continues to remain positive," Khemka told ET.
However, Kapil Shah at this point, has a negative view on the stock. "Stock is at good support level but buyers are yet to show their presence. Buying presence can be witnessed only above 2,250 level. Breach of 2,170 level can lead to further pain up to 2020 level," added Shah.
According to MintGenie poll, 32 analysts on an average recommend 'strong buy' for the stock.
