Shares of Reliance Industries (RIL), India?s largest listed company closed at R887.55, a record low for 2011. The close is 1.61% down over the previous day?s number at the National Stock Exchange (NSE).
The sustained fall reflects the impact of the charges made by the Comptroller and Auditor General of India that the company had overstated the costs of field developments and explored mining zones beyond their contracted areas.
RIL has also been under pressure in recent months on worries of slowing gas output from its prime field the KG D6 block, off the eastern coast. The fall in prices was also an impact of the downgrade by HSBC which classified the shares of RIL ?neutral? from overweight. It cut the price target to R1,040 from R1,084, citing primarily the audit reports.
The Bank?s note said possible investigation into the charges could result in a freezing of bureaucratic decision making, which would hamper Reliance?s ability to carry out exploration and production activities effectively in its blocks. In the course of the trading the price had fallen to R884.10 a 52 week low. The shares had reached R1,124.90, its highest in the past one year, on November 1, 2010.
RIL has underperformed the benchmark Sensex by 12 % over the last three months on concerns of falling gas production from its KG-D6 block, off the Indian eastern coast, HSBC added. On Thursday too while the Sensex fell by 0.81% at the BSE, RIL went down by 1.42%.
The weakness at the RIL counter is also happening simultaneously with ONGC, till recently the one with the second highest market cap in the economy. The broader market is therefore trending down substantially.