The under performance started around June 15, when Nifty was at 7500 from where it touched a high of 8179. Reliance on the other hand has struggled to cross Rs.1000 mark and has declined from a high of Rs. 1135 to Rs. 970. Even at the present levels, the stock is precariously poised as several chart pattern indicate serious downside if the current level were to break conclusively. The trend oscillators are bearishly aligned for further downside should the present support levels break.
So what is ailing Reliance ??
The government has slapped an additional penalty of USD 579 mn (Rs. 3500 crores) for producing less gas than target from its KG-D6 block. The total penalty Reliance will have to pay from April 2010 would be USD 2.36 bn (Rs. 14,200 crores).
The Supreme Court has appointed a retired Australian judge Michael Kirby as Chairman of the three-member arbitration panel to resolve the dispute between the Centre and Reliance Industries Ltd on KG basin.
Any adverse news flow on this front may result in breakdown in Reliance could seriously impact the market as the stock is likely to lead the market down.
