Reliance group stocks stay out of the rally

Source :M.V.S. Santosh Kumar :BL Research Bureau:Sep 15,2010

Counters rule much below their January 2008 highs.

With the Sensex closing above the 19,300 mark for the first time in two years, it is just 9 per cent short of its all-time high clocked in January 2008.

However, stocks in the Reliance pack are anywhere between 35 and 82.8 per cent below their January 2008 highs.

The ADAG (Anil Dhirubai Ambani) group's Reliance Natural Resources (RNRL), Reliance Communication (RCom) and Reliance Mediaworks have been the key laggards, languishing 80 per cent or more below their January 2008 values.

Reliance Power which got listed in February 2008 is down 27 per cent from its IPO offer price, after adjusting for bonuses issued. Even the index bellwether - Reliance Industries Ltd - has not led the charge this time round and trades 35 per cent below its January 2008 level, despite gaining 5.7 per cent in the last 10 days.

Retail favourites

The underperformance from the Reliance stocks in this rally may have been a big blow for the retail investors, as the stocks from the group have the largest retail shareholder base in the listed space. While these stocks made money for investors during the previous rallies, this time around they have disappointed.

With more than 40 lakh shareholders, Reliance Power had the highest number of retail shareholder base as of March 2008 followed by RNRL. This equation has changed over the last 27 months with Reliance Industries displacing Reliance Power as the company with the largest shareholding, the merger with Reliance Petroleum expanding the base.

RPower, RNRL, RCom, RIL, Reliance Infra and Reliance Cap are among the companies with the largest number of retail investors as per the latest shareholding pattern.

While there wasn't much to cheer about for the investors who have held on to the Reliance stocks since January 2008, the ones who entered in March 2009 lows have seen positive returns of 12 per cent to 176 per cent. However, from March lows too, five out of eight Reliance group stocks have under-performed the Sensex. The ones to under-perform were RCom, RNRL, RIL, Reliance Power and Reliance Mediaworks.