Reliance Industries Ltd Falls 7.36%: 5 Key Factors Behind the Weekly Decline

5 January: Reliance Hits New 52-Week High Amid Strong Momentum

Reliance Industries Ltd began the week on a high note, reaching a new 52-week peak of Rs.1,611.20. This milestone reflected a continuation of the stock’s strong upward momentum, supported by robust financial fundamentals and sector leadership. The stock closed at this high level despite a modest Sensex decline of 0.18%, signalling relative strength. Over the past year, Reliance had delivered a total return of 27.54%, significantly outperforming the Sensex’s 8.08% gain, underscoring its dominant position in the oil sector.

Trading volumes were healthy, and the stock was comfortably above all major moving averages, indicating sustained investor confidence. However, some cautionary signs were present, including flat quarterly results and a rising debt-to-equity ratio, which investors would monitor closely in the coming sessions.

6 January: Sharp Intraday Decline and Heavy Trading Amid Sector Weakness

The following day, Reliance faced significant selling pressure, hitting an intraday low of Rs.1,518.30, a 3.75% drop from the previous close. The stock closed down 4.42% at Rs.1,507.70, underperforming both its Oil Exploration and Refinery sector, which declined 2.48%, and the Sensex, which fell 0.19%. This decline was accompanied by heavy trading volumes, with over 78.6 lakh shares changing hands, amounting to a traded value of approximately ₹1,203.81 crore.

Despite the price weakness, the stock remained above its 100-day and 200-day moving averages, indicating longer-term support. However, it traded below its 5-day, 20-day, and 50-day averages, signalling short-term downward momentum. The delivery volume surged by 62.95% compared to the five-day average, suggesting a mix of accumulation and distribution activity among investors.

6 January: Surge in Derivatives Open Interest Reflects Mixed Market Positioning

On the same day, Reliance’s derivatives segment saw a sharp 12.46% increase in open interest, rising to 350,791 contracts. This surge occurred despite the stock’s price decline, indicating heightened market activity and complex positioning strategies. The futures segment accounted for a notional value of approximately ₹2,67,931 lakhs, while options contributed an astronomical ₹19,76,04,13,622 lakhs.

The rising open interest amid falling prices suggests fresh short positions or unwinding of longs, reflecting cautious or bearish sentiment in the near term. However, elevated delivery volumes imply some investors are accumulating shares for the longer term, highlighting a nuanced market stance.

7 January: Downgrade to Hold Amid Mixed Technical and Financial Signals

MarketsMOJO downgraded Reliance Industries from a 'Buy' to a 'Hold' rating on 6 January 2026, citing a shift in technical momentum and mixed financial results. The stock price declined 4.42% on the downgrade day, closing at Rs.1,507.70. Technical indicators moved from bullish to mildly bullish, with the stock trading below short-term moving averages but remaining above longer-term supports.

Financially, the company reported flat quarterly results with a 10.9% decline in quarterly profit after tax compared to the previous four-quarter average. The inventory turnover ratio was low at 0.69 times, and the debt-to-equity ratio rose to 1.42 times, the highest in recent periods. Despite these concerns, long-term growth remains healthy with net sales and operating profit growing at annualised rates of 15.36% and 16.84% respectively.

7 January: Technical Momentum Shift Amid Market Volatility

Alongside the downgrade, Reliance’s technical momentum shifted from bullish to mildly bullish, reflecting a period of consolidation amid broader market uncertainties. The Moving Average Convergence Divergence (MACD) remained bullish on weekly and monthly charts, but the Relative Strength Index (RSI) showed neutral readings, indicating indecision. Bollinger Bands suggested mild upward pressure but with reduced volatility.

Other indicators such as the Know Sure Thing (KST) remained bullish, while Dow Theory presented a mixed picture with no clear weekly trend but a bullish monthly trend. On-Balance Volume (OBV) showed no definitive trend, signalling subdued buying pressure. The stock’s price hovered near key moving average support levels around Rs.1,500, a critical zone for potential rebounds or further declines.

Daily Price Comparison: Reliance Industries Ltd vs Sensex (5-9 Jan 2026)

Key Takeaways

Positive Signals: Reliance Industries demonstrated strong long-term fundamentals with healthy annualised growth in net sales (15.36%) and operating profit (16.84%). The stock remains above its 100-day and 200-day moving averages, indicating longer-term support. Elevated delivery volumes suggest some accumulation despite short-term price weakness. The company retains a dominant market position with a market capitalisation exceeding ₹20 lakh crore and significant institutional backing at 39.08%.

Cautionary Signals: The week’s 7.36% decline and underperformance relative to the Sensex highlight near-term challenges. The downgrade from Buy to Hold reflects mixed technical and financial signals, including flat quarterly results, a 10.9% drop in quarterly PAT, and increased leverage with a debt-to-equity ratio of 1.42 times. Technical momentum softened, with the stock trading below short-term moving averages and neutral RSI and OBV readings. Heavy trading volumes amid price declines and a surge in derivatives open interest suggest increased short-term volatility and profit-taking.

Conclusion

Reliance Industries Ltd’s week was characterised by a sharp reversal from a new 52-week high to a notable decline of 7.36%, reflecting a complex market environment. While the company’s long-term growth prospects and sector leadership remain intact, short-term technical and financial headwinds have tempered investor enthusiasm. The downgrade to Hold and the technical momentum shift signal a consolidation phase amid broader sectoral pressures and market volatility.

Investors should monitor key support levels near Rs.1,470 to Rs.1,500 and watch for renewed momentum signals before considering fresh exposure. The elevated delivery volumes and strong institutional presence provide some reassurance, but caution is warranted as the stock navigates this period of uncertainty. Overall, Reliance remains a core large-cap holding with robust fundamentals, but near-term price action may remain volatile as market participants digest recent developments.

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