Sensex falls 750 pts from day's high on selloff in RIL, ends 19 pts up

Mumbai: Investors on Dalal Street were mostly left unimpressed by Reliance Industries' 43rd annual general meeting (AGM) on Wednesday even as it made a slew of big-bang announcements, leading to a huge selloff in the stock that weighed heavily on Sensex with the benchmark erasing over 750 points gains to end marginally higher.

The investors ignored big announcements at the company’s AGM and were disappointed that its deal with Saudi Aramco was not proceeding as planned earlier.

Another record surge in India’s coronavirus infections also continued to bother market participants.

Sensex closed merely 19 points higher at 36,052. Earlier in the day, it had risen as much as 777 points to 36,810. Peer Nifty added 11 points to close at 10,618.

“On the oil to petrochem business, its (RIL) deal with Saudi-Aramco having been postponed due to unforeseen conditions comes in as a negative. The stock price of Reliance has witnessed a decline towards the end of the AGM since most of the news was already priced in and there were not many surprises,” said Nirali Shah, senior research analyst, Samco Securities.“Hence it will see some correction to levels of Rs 1,750 in the short term but the long-term growth trend is still intact for this stock,” she added.

Going ahead, the market may continue with its uptrend in the near term.

“Nifty has strong support at 10,550, above which it trades strong. Only a breach of the same is expected to invite selling pressure. We advise traders to remain long with mentioned support at 10,900-11,100 levels on the higher side,” Sahaj Agrawal, head of research- derivatives at Kotak Securities said.


India’s most valued firm RIL alone led to a fall of 210 points for the benchmark Sensex, as its shares closed 3.71 per cent lower at Rs 1,845.60. Banks and financial stocks too added to losses.

RIL announced Google’s investment in Jio Platforms, Jio’s 5G foray and a host of other announcements at its AGM but lack of a deal with Aramco disappointed investors.

Earlier in the day, the stock had risen as much as 3.23 per cent to a new record high of Rs 1,978.50. The selloff in the stock blew away investor’s wealth by Rs 1.26 lakh crore as the market cap of the company slid to Rs 11.7 lakh crore.

"The way the stock markets seesawed post 2 pm (when the AGM began) showed the importance of Reliance stock for the Indian markets. The stock price had moved up around 16.5% in this month anticipating announcements at the AGM. Most of the announcements were in line with the expectations built till yesterday and the stock price reacted on the principle of buy on expectation and sell on announcements," said Deepak Jasani, Head Retail Research, HDFC Securities.

On the other hand, shares of IT companies were the top contributors to Sensex’s gains. IT major Infosys was the best performer as it rallied 6.16 per cent ahead of its June quarter results while larger rival Tata Consultancy Services (TCS) gained 2.85 per cent.

The market breadth was weak with losers outpacing gainers in the ratio of 1.4:1. Broader BSE 500 index closed unchanged while BSE Midcap and BSE Smallcap indices dropped 0.35 per cent and 0.05 per cent, respectively.

BSE IT index ruled the charts with a 4.89 per cent gain. BSE Telecom index was the top sectoral loser as it shed 3.63 per cent while BSE Energy index followed next with a 3.23 per cent decline.

Bharti Airtel and Vodafone Idea dropped 4.24 per cent and 7.39 per cent respectively, as RIL announced ambitious plans for the telecom majors’ rivals Jio.

IT major Wipro jumped 16.84 per cent after its June quarter net profit managed to beat estimates, even as it warned that Covid-19 pandemic could hit technology spending and impact the company’s sales and financial performance.

Markets at a glance

• Sensex rises 0.05% or 19 points to close at 36,052
• Nifty climbs 0.10% or 11 points to close at 10,618
• A total of 16 of 30 Sensex stocks close higher
• Infosys top Sensex gainer, rises 6.16% ahead of Q1 earnings
• Other Sensex gainers: HCL Tech up 4.13%, TCS 2.85%
• Top Sensex losers: Airtel down 4.24%, RIL 3.71%
• RIL tumbles after scaling record high on no progress in Aramco deal
• Bears take over; advance-decline ratio at 1:1.4
• Broader market underperforms, BSE Midcap down 0.35%, Smallcap 0.05%
• BSE IT index top sectoral gainer, up 4.89%; Wipro up 16.84% as Q1 beats street view
• Other IT gainers: NIIT Tech up 10%, Tanla Solutions 8.07%
• BSE Telecom top loser, down 3.63%; Voda Idea down 7.39%, GTL Infra 4.88%
• Bharti Airtel, Voda Idea hammered on Jio’s ambitious plans

Who moved my market

• RIL decline weighs

Index heavyweight RIL alone shaved off more than 210 points off Sensex in Wednesday’s trade, as investors gave a thumbs down to the deal with Saudi Aramco not going through as planned, and shrugged off blockbuster announcements such as Google's investment in Jio Platforms, and the 5G foray. Dealers also said the investors bought the stock in a build-up to the announcement and sold on the news.

• Another record surge in Covid infections

The number of new coronavirus cases in India rose by a record 29,429, taking its total tally to 936181, even as the recovery rate further improved. The death toll climbed to 24,309 with 582 people succumbing to the infection in the past 24 hours.

• World stocks mixed

Asian shares pared gains on Wednesday, led by losses in Chinese stocks, after Beijing vowed retaliatory sanctions against the United States, while the euro rose to a four-month high on the prospect of stimulus ahead of a crucial EU summit, Reuters reported. Meanwhile, European shares rebounded on Wednesday from losses in the previous session, bolstered by positive updates on a potential COVID-19 vaccine, while investors weighed a mixed bag of quarterly reports at the start of earnings season. MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.14 per cent, after rising over 1 per cent earlier in the session, while the pan-European STOXX 600 rose 0.8 per cent.

What to watch out for

• The coronavirus cases in India are witnessing a record rise each day and are a major cause of worry.

• The movement of global markets will be closely watched as the domestic market tends to follow the cues.

• Progress on a domestic as well as overseas vaccine for Covid-19 treatment will be closely watched.

• The June quarter corporate earnings season has started and it will provide a better picture of the damage caused by the pandemic-induced lockdown. More than the numbers for the quarter, the commentary and the outlook will be key.