Reliance share price crashes over 20% in a year: Is it a low-hanging fruit or falling knife? Experts decode

Reliance Industries share price crashed almost 4 per cent to hit its fresh 52-week low of ₹1,156 in intraday trade on BSE on Monday, March 3. The stock opened at ₹1,209.80 against its previous close of ₹1,199.60 and dropped 3.6 per cent to the level of ₹1,156. Around 12:05 PM, the stock traded 3.30 per cent lower at ₹1,160.

The stock has been among the top laggards in the Sensex index for the last year. Considering Monday’s low of ₹1,156, the stock has declined more than 22 per cent over the last year. Equity benchmark Sensex has declined by 1 per cent for the same period.

The stock hit a 52-week high of ₹1,608.95 on July 8 last year. In about seven months, the stock has crashed about 28 per cent from its 52-week high.

Why did Reliance share price crash today?

Reliance share price has been under pressure over the last year. The decline on Monday came after reports emerged that Reliance New Energy, a unit of the company could be penalised after failing to set up a battery cell plant.

“A unit of billionaire Mukesh Ambani-led Reliance Industries risks being penalized after failing to set up a battery cell plant that formed part of Indian Prime Minister Narendra Modi’s push to cut import dependence,” Bloomberg reported, quoting people familiar with the matter.

“Reliance New Energy Ltd., among companies that won a bid for battery cell manufacturing in 2022 under an Indian government plan to reward local production, is liable to pay fines of as much as 1.25 billion rupees ($14.3 million) for missing a deadline,” the Bloomberg report added.

Mint could not independently verify this news. 

Should you buy Reliance stock?

Reliance Industries shares have underperformed the benchmark index over the last year. However, experts remain positive about the behemoth and expect the downtrend to reverse due to a faster-than-expected recovery in its retail business and positive developments in its new energy ventures.

Abhishek Pandya, a research analyst at StoxBox, underscored a potential tariff hike in the telecommunications sector and a recovery in the petrochemical business are expected to boost Reliance’s overall performance, offering upside potential for the stock.

Pandya said the company’s new energy business is approaching a transformative phase, with phase I of its solar module manufacturing capacity set to commence in Q4FY25, followed by cell manufacturing and phase II of module production in the next two quarters.

“RIL has already invested $3-4 billion in this segment, with the remaining $6-7 billion expected to be deployed over the next two to three years as its solar PV and battery ventures scale up. We believe new energy could be a major profit growth driver in the long run,” said Pandya.

Moreover, Pandya highlighted that Reliance Retail is streamlining operations by shutting unprofitable stores and taking a strategic approach to its B2B segment.

“A faster recovery in discretionary spending and expansion in consumer ventures will further strengthen the company’s outlook. Considering these factors, we remain positive on Reliance Industries from a medium- to long-term perspective,” said Pandya.

Reliance, on January 16, reported a 7.4 per cent year-on-year rise in Q3FY25 consolidated net profit to ₹18,540 crore, compared to ₹17,265 crore in the corresponding period last year.

The Q3 numbers of the oil-to-telecom-to-retail conglomerate were positive on several parameters. Profitability in the oil-to-chemicals (O2C) division and revenue growth in the retail segment grew year-on-year after declining in Q2FY25.

While the stock remains a buy for the long term due to its solid growth prospects, experts suggest caution in the near term due to weak technical indicators.

According to Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, Reliance has broken below the long-standing ₹1,200 support level in the current session, a key threshold for its price stability.

“If the stock fails to close above ₹1,200 on a weekly basis, it could signal a bearish range shift. This would establish ₹1,200 as a new resistance level, with the stock likely trading within a lower range of ₹1,100- ₹1,200,” said Patel.

“Such a shift could indicate further weakness, prompting sellers to dominate while buyers may wait for confirmation before stepping in. A sustained move below ₹1,200 could increase downside pressure, making ₹1,100 the next crucial support to watch,” Patel said.

Mandar Bhojane, an equity research analyst at Choice Broking, highlighted that Reliance Industries is testing its weekly rising trendline and has formed a strong bearish candle with high volume, indicating selling pressure.

According to Bhojane, a decisive break below ₹1,150 will confirm further downside, with the next major support levels at ₹1,080 and ₹1,048. On the upside, immediate resistance is seen at ₹1,200 and ₹1,250. The broader trend remains weak unless the stock sustains above key resistance levels.

Bhojane underscored Reliance is trading below the 200-EMA on the weekly chart, reflecting a bearish market structure. The RSI is at 33.6, trending downward, signalling weak momentum, while the Stochastic RSI has formed a negative crossover, confirming selling pressure.

“These indicators suggest that any recovery will require strong bullish confirmation before considering long positions. Until then, the stock remains vulnerable to further downside,” said Bhojane.

“Traders should closely monitor the ₹1,150 level, as a breakdown will likely trigger further correction. For any bullish reversal, the stock needs to sustain above ₹1,150 and form a strong reversal pattern. A breakout above ₹1,200, the 200-EMA level, would confirm a shift in momentum, providing a potential buying opportunity. Until then, caution is advised, with a preference for downside levels unless a clear reversal signal emerges,” Bhojane said.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.