Shares of Reliance Industries slumped almost 14 percent in intraday trade on Monday amid a sharp slump in global crude oil prices. The index heavyweight stock opened at the day's high of Rs 1,245 per share, down 2 percent from its Friday's close of Rs 1,270.05. It hit the day's low at Rs 1,094.95.

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Reliance Industries shares quoted at Rs 1,113.15, down Rs 156.90, falling 12.35 percent on BSE. The benchmark BSE Sensex settled 1,941 points lower at 35,634. So far this year, Reliance Industries has corrected 27 percent, while the Sensex has declined almost 14 percent.

Market experts say that falling crude prices has sowed the seeds of doubt in investor mind whether Saudi Aramco will invest money in RIL and that will impact the conglomerate's plan to clear its debt by 2021.

Speaking to CNBC-TV18, A K Prabhakar, Head, Research, IDBI Capital said, “Crude impact is the primary reason and Reliance Industries has said it will become debt free by 2021. Now with crude correcting will Saudi Aramco invest money in RIL is the big question on investors’ mind.”

Global crude oil prices plummeted over 30 percent earlier on Monday, posting its biggest loss in nearly three decades, on worries that a price war is brewing following Saudi Arabia slashed its official selling price after the Organization of Petroleum Exporting Countries (Opec) and Russia failing to reach a deal to reduce output.

Brent crude futures fell by as much as $14.25, or 31.5 percent, to $31.02 a barrel. That was the biggest percentage drop since January 17, 1991, at the start of the first Gulf War and the lowest since February 12, 2016. It was trading at $35.75 at 0114 GMT.

US West Texas Intermediate (WTI) crude fell by as much as $11.28, or 27.4 percent, to $30 a barrel. That was also the biggest percentage drop since the first Gulf War in January 1991 and the lowest since February 22, 2016. It was trading at $32.61.

The outlook for Reliance Industries refining business has deteriorated significantly in recent weeks amid falling demand for air turbine fuel in the wake of the coronavirus outbreak. The refining business contributes RIL's largest operating profit and a gloomy outlook in the oil-telecom-retail conglomerate's core business has dampened investor sentiment.

RIL around mid-January reported its highest-ever quarterly consolidated net profit at Rs 11,640 crore for the third quarter ended December 31, up by 13.5 percent from the year-ago period. In the corresponding quarter last year, the company posted a net profit of Rs 10,251 crore. CNBC-TV18 Polls had predicted a profit of Rs 11,333 crore for the quarter under review.

However, RIL's consolidated revenue for the third quarter dipped 1.4 percent to Rs 168,858 crore from Rs 171,300 crore in the corresponding period last fiscal.

Not worried about the recent downtrend in the stock, global brokerage HSBC sees current price levels as buying opportunity in Reliance Industries and has recommended a target price of Rs 1,740 per share. It said that deleveraging and down-streaming concerns overlook telecom and retail potentials.

Similarly, Morgan Stanley has moved RIL as its top pick at a target price of Rs 1,632 per share. It said the price is down to levels reached last year when it stated its plan to lower debt.

On whether the current price levels are a buying opportunity, IDBI Capital's Prabhakar said, “I will wait to buy, no hurry.”

The stock may trade volatile in immediate term given the broader equity sell-off and upside will test Rs 1,270 levels, experts said.

"There is widespread panic because of the coronavirus scare and second, that oil and natural gas prices have completely collapsed. Reliance Industries could test Rs 1,095 in this kind of situation. If a new investor wants to enter, they could buy in small quantities with a view that it could fall further to Rs 1,000 levels. Reliance Industries may not stabilise until it crosses the resistance level of Rs 1,270," Abhijeet Ramachandrran, an independent analyst and founder and trainer at Tips2trade, a financial education and training firm told CNBC-TV18.com.

-with inputs from Reuters

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First Published:Mar 9, 2020 10:32 AM IST