Reliance Industries share price could plunge by another 15%

Reliance Industries (NSE:EQRELIANCE) share price is having a difficult year as concerns about India’s conglomerates continue. The stock was trading at 2,252 INR, a few points above the year-to-date low of 2,182 INR. This price is close to its lowest level in about 52 weeks and is down by ~21% from its all-time high.

Concerns about India’s conglomerates

Reliance Industries stock price has pulled back because of two primary reasons. First, there are concerns about the health of India’s conglomerates the recent Adani Group woes. Shares of Adani companies have dropped after Hindenberg Research revealed how the company used offshore companies to boost its stock.

The situation worsened on Tuesday after media reports said that Adani was seeking for more time to pay its loans. That decline erased over $6.4 billion worth of the company’s market capitalization.

Reliance Industries has not been accused of any wrongdoing and analysts believe that the firm is more transparent than Adani. However, as we have seen during the ongoing banking crisis, similar stocks tend to be guilty by association.

Second, there are concerns about Reliance Industry’s growth in 2023 after reporting strong growth in 2022. This growth was supported by the company’s energy business following Russia’s invasion of Ukraine.

In the most recent quarter, the company’s revenue in its retail segment jumped by 17% as the number of stores rose to over 17,225. Its digital services revenue rose by 20% YoY while oil and gas jumped by 75%. Oil and gas prices have pulled back this year, which could have an impact on the company’s growth and profitability. O2C revenue rose by 10% even as margin pressure continued.

Reliance Industries share price outlook

RII stock by TradingView

The daily chart shows that the RII stock price has been under pressure in the past few months. This sell-off started after the stock found strong resistance at about 2,770 INR, where it formed a triple-top pattern. The neckline of this pattern was at 2,310 INR, which it moved below this month.

It has also moved below the 25-day and 50-day moving averages. Therefore, by measuring the distance between the triple-top and the neckline, we can estimate that the stock will be at 1,928 INR, which is about 15% below the current level.