Mumbai: Shares of Reliance Industries Ltd (RIL), India’s second-most valued company by market capitalization, on Monday fell as much as 2.3%—its steepest fall in one month—after market regulator Securities and Exchange Board of India, or Sebi, penalized the company for unlawful transactions and imposed a one-year ban on it and 12 other entities from trading in equity derivatives.
The stock touched a low of Rs1,259 a share. At 11am, the RIL stock was trading at Rs1,262 on BSE, down 2% from its Friday’s close while India’s benchmark Sensex Index fell 0.45% to 29278.42 points.
“Any adverse order by regulator impacts the reputation of the company,” said J.N. Gupta, co-founder of Stakeholders Empowerment Services. “We do not see any financial impact due to penalty amount however we expect long legal battle ahead,” he added.
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SEBI directed RIL to pay Rs447.27 crore along with an annual interest of 12% dating back to 29 November 2007, which translates into a penalty of around Rs1,300 crore.
Sebi arrived at the unlawful gain of Rs513 crore by considering the net short position that RIL and 12 other entities maintained while trading in the Reliance Petroleum Ltd (RPL) stock in November 2007, ahead of a planned amalgamation of the firm with RIL.
In 2007, RIL sold a 4.1% stake in RPL, but to prevent a slump in the RPL stock, the shares were sold first in the futures market and later in the spot market, covering the share sales in the futures market.
RIL has already said that it will appeal against the Sebi order in Securities Appellant Tribunal.
Shares of the RIL have gained nearly 19% in last five weeks after analysts started upgrading the stock on triggers that the revenue generation for its telecom venture Jio starting from 1 April following the announcement that it will end free service and start charging its customers.
Analysts also expected that its cash flow may go up significantly as its core projects get commissioned by next year. The core projects include its refinery off-gas cracker (ROGC) and petcoke gasifier.
