Reliance Power Stock Declines Amid Profit Booking and Market Volatility

On October 8, 2024, shares of Reliance Power continued their decline, marked by hitting the 5% lower circuit for the fourth consecutive session. The stock, led by Anil Ambani, is currently trading at Rs 45.98, marking a significant drop from its recent 52-week high of Rs 53.64 attained just last week. Investors have been actively profit booking following a remarkable rally that saw the stock rise over 60% in a month, buoyed by news of the company becoming debt-free.

The downward trend in Reliance Power’s share price is primarily attributed to profit-taking by investors, a typical occurrence after substantial gains in stock value. Analysts point out that the Relative Strength Index (RSI) at 79 indicates overbought conditions, suggesting that the recent selling pressure is largely profit-driven.

The company’s announcement on September 18 about resolving its debt issues significantly boosted market sentiment. This came after Reliance Power was released from debt commitments and obligations of its subsidiary, Vidarbha Industries Power Limited (VIPL), which amounted to Rs 3,872.04 crore. Furthermore, the company settled disputes with CFM Asset Reconstruction Private Limited by pledging 100% of VIPL’s shares as part of the settlement.

Adding to its achievements, Reliance Power secured a significant 500 MW/1000 MWh battery storage contract from the Solar Energy Corporation of India (SECI). This contract has positioned Reliance Power as a key player in one of the world’s largest standalone battery energy storage projects.

Despite the current dip, Reliance Power has delivered strong year-to-date returns, with the stock rising approximately 102%, significantly outperforming the Nifty 50 index, which returned only 15% during the same period. In the past 12 months, the stock’s performance has more than doubled investors’ money, yielding a 172% return compared to Nifty’s 28% gain.