The Reliance stock market buzz intensifies today, October 28, 2024, with the much-anticipated 1:1 bonus issue set to go live. As investors look forward to receiving additional shares, the spotlight is on Reliance’s share price movement and the impacts this bonus issuance might bring. Here’s everything you need to know about the bonus issue and how it could shape Reliance’s stock trajectory.
What is Reliance’s 1:1 Bonus Issue?
Reliance Industries Limited (RIL), India’s largest private sector entity, announced its 1:1 bonus issue on October 28. This means for every Reliance share investors own, they’ll receive an additional share at no extra cost. Let’s break down what this actually signifies for both current shareholders and those planning to invest.
| Bonus Ratio | Record Date | Eligibility |
| 1:1 | October 28, 2024 | Shareholders must own shares by October 25, 2024 |
Why today is important for Reliance shareholders
As the record date, October 28 is pivotal. This is the cut-off for determining which shareholders qualify for the bonus shares. Investors who bought shares by October 25 can expect their holdings to double, as each share entitles them to an additional one of equal value.
Note: Reliance shares traded ex-bonus as of today, meaning buyers after this date aren’t eligible for the bonus issue.
Also Read: Reliance Q4 results: Insights into India’s largest private company
Recent Reliance share price movements
Ahead of the bonus issuance, Reliance’s stock saw a downward trend. Reliance’s share price closed at ₹2,655.45 on October 25, marking a 10% drop over the past month. This decline reflects broader market pressures, including global economic uncertainties and significant selling from foreign portfolio investors (FPIs).
- Reliance’s market capitalization stands at approximately ₹17.97 lakh crore.
- A significant 5% dip in its September-quarter profit to ₹16,563 crore.
- Operational revenue for this quarter remained nearly flat at ₹2,35,481 crore.
With the upcoming bonus issue, investors and market watchers will closely observe if this share price decline persists or if the bonus issue stimulates fresh buying interest.
Financials for the Quarter ending September 2024
Reliance’s recent financial report highlighted a 4.7% dip in profit compared to the previous year. Revenue saw marginal growth of 0.2%, bringing its operating revenue to ₹2.35 lakh crore. EBITDA also experienced a slight decline, ending the quarter at ₹43,934 crore.
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Factors contributing to the decline
Reliance’s oil-to-chemicals (O2C) segment underperformed, which has been a primary revenue driver. Additionally, geopolitical tensions and FPI pullback have added strain on the Indian stock market, affecting heavyweights like Reliance.
Understanding the Ex-Date effect
An ex-bonus date, as of today, indicates that anyone purchasing Reliance shares now will not be eligible for the 1:1 bonus. Therefore, share prices often adjust lower to factor in the issuance of additional shares. In this case, the adjustment effectively splits the share price, which can sometimes appear as a sharp dip on trading platforms. This visual drop is essentially a recalibration in share value per share, ensuring the overall market capitalization remains the same.
What to expect moving forward
Market analysts have been cautiously optimistic yet conservative in their short-term forecasts. Based on recent technical indicators:
- Support Levels: Analysts have pegged Reliance’s support at ₹2,570 and ₹2,410.
- Stop-Loss Recommendation: A stop-loss is recommended at ₹2,760 to mitigate potential downside.
- Technical Trends: The stock has breached the lower band of a broadening rising wedge, showing a bearish outlook on the charts. Furthermore, the RSI (Relative Strength Index) is below 50, suggesting weaker momentum.
Investors are advised to monitor these technical signals closely and stay updated on global market developments that may impact Reliance’s O2C and other core sectors.
Should you invest in Reliance post-bonus issue?
Investing post-bonus issue can be attractive as the effective share price reduces, allowing investors to buy more shares within the same budget. Here are some points to weigh:
- Dilution Impact: Though existing shareholders receive additional shares, the overall value per share adjusts. In the case of Reliance’s 1:1 bonus issue, the share count will double, and theoretically, the share price will halve, balancing the total market cap.
- Long-Term Potential: Reliance’s diversified business model across petrochemicals, telecommunications, and retail sectors remains robust, positioning it well for recovery in the medium-to-long term.
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Key takeaways
- Record Date is Crucial: October 28, 2024, is the deciding date for receiving Reliance’s 1:1 bonus shares.
- Price Adjustment on Ex-Date: With the stock going ex-bonus today, a visible price dip on trading platforms reflects the new effective share price.
- Technical Signals: Current indicators suggest a bearish outlook, with the share trading below its 200-day moving average.
- Investment Strategy: While the bonus issue offers added value, careful monitoring of support levels and market trends is essential.
Reliance’s 1:1 bonus issue serves as a strategic move to enhance shareholder value and retain interest in a challenging market climate. It provides shareholders with additional shares without additional investment, reinforcing investor confidence.
