Market Movers: Why RIL shares ended in the red despite green energy plans

MUMBAI: For the passerby, the over 2 per cent fall in the stock on Thursday may appear as a thumbs-down to the big bang announcements made by the company’s Chairman and Managing Director Mukesh Ambani at the annual shareholders’ meeting. The reality, though, is a little different.

True, investors were a little disappointed by the prevailing lack of clarity on Saudi Aramco’s stake purchase in the energy business but the real reason behind the fall was more likely the good old “buy the rumour, sell the news” trade.

Shares of the index major had rallied substantially in the run-up to Thursday’s AGM in anticipation of major announcements such as the ones made by Ambani. With investors looking to book profits and some traders unwinding their long position because of the expiry of the June derivative series, the stock failed to exactly reflect what investors made of RIL’s announcements.

That clarity is likely to emerge on Friday morning. If the reaction from the analyst community so far is any barometer, it is plausible the stock may see some green.

IT stocks do the heavy lifting

With RIL shares down in the dumps from the beginning of the session, IT stocks took it upon themselves to give investors a good day. The IT pack was the biggest reason why the benchmark indices were able to shake off Wednesday’s weakness as they contributed 85 points to the Nifty50’s rise. Analysts suggested that the 2.8 per cent rise in the Nifty IT index was likely a result of the derivatives expiry, too, as traders, who had taken short bets on the sector recently, likely covered their positions.

Adani Green gets the blues

If the company’s investors thought that the situation could not get any worse for Adani Green, it just did. Battered in recent days due to controversy surrounding some of its foreign portfolio investors, the stock came under pressure again as the country’s richest man launched an ambitious green energy project that could heat up competition in India’s renewable energy space.

Mukesh Ambani’s Rs 75,000 crore investment in solar and other renewable energy projects will make him a direct competitor to Adani Green and we all know what happens when RIL competes. Adani Green’s investors know too as the stock ended 3 per cent lower.

Strong debuts

While much of the market was preoccupied with Reliance Industries, Sona BLW Precision Forgings and Shyam Metalics and Energy made impressive debuts on the bourses. Sona BLW ended the day with gains of 24 per cent from its issue price despite what many called a muted response to its initial public offering earlier this month. Shyam Metalics, whose IPO was a raging hit in the primary market, ironically underperformed Sona BLW with a 23 per cent gain.

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