Markets piggyback on Reliance Industries rally; Sensex rises 271 points

Shares of RIL rose 2.7 per cent to end at a new record of Rs 2,650, valuing the firm at Rs 17.93 trillion. The stock surpassed its previous record high of Rs 2,620 on July 20, 2023

The equity benchmark indices were up 0.3 per cent on Wednesday, bolstered by a sharp uptick in the shares of Reliance Industries (RIL), which rallied 2.7 per cent to hit an all-time high of Rs 2,650 on the BSE.

The RIL stock surpassed its previous high of Rs 2,620 on July 20 last year. Despite the mixed global cues, the BSE Sensex rose 271.5 points, or 0.38 per cent, to end at 71,658, while the Nifty 50 index added 74 points, or 0.34 per cent, to finish at 21,619.

The Mukesh Ambani firm made a 210-point contribution to the Sensex gains. ICICI Bank, whose stock witnessed a 1.4 per cent surge, was the second-biggest contributor at 84 points.

Gains in RIL came after Goldman Sachs revised upwards its price target from Rs 2,660 to Rs 2,885, even as it lowered the Ebitda forecast.

“For RIL we revise our FY24E/25E/26E Ebitda forecast by -2 per cent/-3 per cent/-4 per cent, reflecting the updated refining/chemical margin estimates, lower telecom earnings estimates (delaying tariff hike assumptions which are partially offset by higher subscriber forecasts) and fine-tuning of the capacity ramp and margin for the new energy business. Our 12-month target price which is SOTP-based (underlying assumptions unchanged) is revised higher by +8 per cent as lower earnings estimates are offset by the roll forward of SOTP to September 2025 (before March 2025) including the roll forward of DCF for consumers businesses,” Goldman Sachs said in a note.

Meanwhile, the shares of ONGC and oil marketing companies (OMCs) fell following a downgrade by Goldman Sachs.

“For upstream, we see operational metrics less compelling while valuations are rich in global context. For OMCs, we see the recent rally too fast too soon given the still broadly constructive oil and refining margin view. We downgrade ONGC and Indian Oil to Sell from Neutral and BPCL to Neutral from Buy. We remain Buy rated on RIL,” the US-based brokerage said.

Barring Japan, most other Asian markets fell on Wednesday tracking the weak closing on Wall Street. China’s CSI 300 closed at near 5-year lows, while the Japanese markets hit fresh 33-year highs. European stock also edged lower on opening amid caution ahead of the release of key US inflation data.

“The US inflation data to be released on Thursday has kept global investors on the edge as it would have an impact on rate decisions. However, the Indian market is showing strength despite global volatility. We expect markets to consolidate in a broader range with a positive bias as overall Q3 earnings are estimated to remain healthy,” said Siddhartha Khemka, Head of Retail Research, at Motilal Oswal Financial Services.

“The technology sector is expected to remain in focus as IT major TCS and Infosys will announce their Q3 results on Thursday. Their management’s commentary and guidance would set a precedent for other tech companies,” Khemka added.

Illustration: Ajay Mohanty