Shares of Reliance Industries Ltd (RIL) declined sharply on Tuesday after fresh analyst commentary highlighted intensifying competition in the organised retail sector, a key growth driver for the conglomerate’s valuation. The stock closed 4.5% lower at ₹1,507.70, after falling as much as 5.1% during intraday trade, marking its steepest single-day fall since June 2024. The decline wiped out nearly ₹1.09 lakh crore from RIL’s market capitalisation during the session.
The sell-off followed global brokerage CLSA’s decision to remove Reliance Industries and Nestlé from its model portfolio, while adding Eternal and DMart, triggering renewed concerns around the retail space.
Given RIL’s heavy weightage on benchmark indices, the stock’s fall dragged broader markets lower. Reliance holds the second-largest weight on key indices, and its decline contributed significantly to losses in both the Sensex and the Nifty, which underperformed other Asian peers on the day.
Investor sentiment was further dented by signs of stress in the organised retail sector. Tata Group-backed Trent recently reported a 15% year-on-year drop in average revenue per square foot for the December quarter, pointing to a challenging operating environment. Market participants interpreted recent brokerage commentary on rising competition as a broader sector-wide concern rather than an isolated issue.
Reliance Retail in focus:
Reliance’s retail business, though unlisted, is considered central to the group’s long-term growth story. The segment has previously been valued at over $100 billion by domestic brokerages, accounting for a significant portion of RIL’s overall valuation. As a result, any negative signals from the retail sector tend to have an outsized impact on the stock.
Tuesday’s decline also reflects some profit booking, following a strong rally in 2025. RIL shares gained around 29% last year, significantly outperforming the Nifty 50, which rose about 11%, driven mainly by strength in the energy business and improved refining margins.
Valuation concerns:
At current levels, Reliance Industries trades at over 23 times forward earnings, above its long-term average, making the stock more sensitive to adverse sector developments. While longer-term growth drivers remain intact, near-term uncertainty around retail competition and consumer demand continues to weigh on investor sentiment.
Disclaimer:
This content is for informational purposes only and should not be considered investment advice. Readers should consult a qualified professional before making any financial decisions.
