Interesting…..Sensex has regained 20000 levels …last seen in January 2008…..but Index heavy weight Reliance Industries has actually lost ground since then !…..Sensex bypasses Reliance weightage hurdle to regain 20k levels
In January 2008 Reliance Industries reached a high of Rs 3252 on BSE while the Sensex soared to a High of 21205…..Reliance Industries is currently Rs 1032 while the Sensex has regained 20k levels…adjusting for a 1:1 Bonus in late 2009,Reliance Industries would be Rs 2064…..that’s a drop of over 36% and Rs 1188 from January 2008 Highs
Reliance Industries however hangs to it’s top position in Market Capitalisation…today it’s Rs 337941 crs…..but ONGC is near it….today ONGC closed at a Market Cap of near Rs 300000 crs….ONGC was at a high of Rs 1357 in January 2008 when Sensex hit record highs….Today it’s regained these levels and kisses Rs 1400….so it’s regained Market Cap levels……Reliance Industries’ decline in it’s Share Price has caused the decline in it’s Market Cap and helped ONGCs market cap come nearer it
An oft quoted school of thought expressed on Stock Channels on TV advises to buy Reliance as it has not participated in the Sensex rise at all…and the next Sensex rise would come from it’s weightage and it’s rise in it’s share price……….
While Reliance Industries remains a part of Core Segment in Clients Portfolios,I would urge readers of this blog to seek comforts of Valuation,rather than emotion….the emotion that Reliance has to rise if the Sensex has to rise…we’ve seen how this common,confess that I too held it,assumption belied in the past two years
So stop relying on Reliance to make Money…stop assuming that if the Sensex has to move up,heavyweight Reliance must move up first…..but if I’ve to throw the cat among the pigeons…then if Reliance Industries does rise,it would make the Sensex rise that much more easier and certain…….
Cheers !
5 thoughts on “Sensex stopped relying on Reliance to surge ahead….So should you”
Reliance’s core businesses don’t inspire much confidence in current times. GRM’s are subdued , Petchem capaicties are under utilised worldwide, Reliance has been unable to revamp production in KG basin from 60 mmscmd to 80.
It has been getting into unrelated businesses(bought a significant stake in EIH @ Ev/EBITA of 12! Bought a controlling stake in Infotel Broadband for a whopping 1 Billion dollars(for a business which has no business other than spectrum which was funded by Reliance!!).
It has also been buying Shale assets but that would only add to earnings 4-5 years down the line.
There was news that Reliance is gonna set up the largest generic pharama plant in India, Reliance is getting into Hospitals, etc,etc…
The only certainty in Reliance’s future is uncertainty!
The only joker in the pack would be further E&P discoveries & Shale assets in India but i wouldn’t hold my breath for that.
I have cut down my exposure significantly to Reliance & moved in to companies with clear focus which are domestically oriented & are a play on consumption.
Cheers!
Wonderfull analysis Sir. I am silent reader of your blog since from past 1 years. 🙂
Hey Mahesh…thanks…keep visiting and responding…but I do hope Reliance Ind participates in the next run up !….it’s part of my clients Core Segment Selection….Cheers
hi gaurav, I am avid follower of ur blog. As u’ve right stated RIL has started contrributing to the Sensex now and we shall soon see levels of Rs1250 at 21k sensex in the near future- especially post RIL’s Q2 earnings. Would like a f/b from ur end.
Hey Ram,
I hope for Reliance I don’t have to say “Hey Ram !” like Gandhiji is reported to have said just before breathing his last after he was shot !…….Let’s leave it at that……With Reliance Group facing serious Insider Trading charges for Reliance Petroleum Machinations a few years ago,don’t expect Group Intervention to support or jack up the Price in Reliance Industries….share price will ,as it should,follow the fundamentals now….and these were under some strain the past year or two ….I continue to hold it in the Core Segment of Portfolios….Cheers !