Reliance down 16% takes index down by 9% - We had cautioned you on September 1

On September 1, we had clearly warned that Reliance Industries can take the Indian stock markets down sharply. Reliance has since dipped from Rs.2,136 on August 31 to a low of Rs.1,800 on September 16 - a dip of about 16% and the Bombay Sensitive Index from 14,565 on August 31 to 13,263 today - down by whopping 9%. The writing was clearly on the wall but the majority of the market experts / brokerages ignored it - leaving Investors / traders trapped at higher levels. At 14,500-15,000 levels of the index, many leading Indian brokerages including an expert from Karvy reiterated a number of times on TV that he was sure that the index will climb to 16,000-17,000 levels shortly. Sample this : in his book 'Swim with the Sharks' - Harvey Mackay writes 'You'll always get the good news, its how quickly you get the bad news that counts'.

Obama vs Goldman 'Oil' Sachs

Goldman Sachs had predicted earlier in the year the crude oil will touch $150 by July 4th when oil was ruling around the $100-$110 mark. Being that it is a very large player in the crude futures market and therefore, true to their word we got to see oil at around $142-147 by July 4th. The world reeled under the pressure of high inflation due to the tizzy hieghts that crude oil touched. This evoked very strong reactions accross the world including the political circles in the USA. Mr.Barack Obama, one of the US Presidential candidate, went to town proclaiming that he will, among other things impose a "windfall" profits tax on oil companies if he is voted into power. Crude oil prices have since come down to around $105-110 levels currently. However, Goldman Sachs is still very bullish on crude and has once again put a target of $150 on crude by year end. With the US election date fast approaching, we will soon have the political pundits coming out with a constant dose of opinion polls on the chances of both presidential candidates. Positive swings in favour of Obama could well signal a negative on crude oil prices and negate the Goldman effect.

Reliance (2081) down 3% , BSE Sensex down only 0.5%

Reliance Industries (2081) has underperformed the BSE Sensitive Index by almost 6 times in September up to date. This was discussed by us on September 1st - when we were very skeptical about Reliance in terms of returns vis-a-vis the index.

Reliance Industries (2136) , RPL (157) look weak

Indian stock market's leading blue chip Reliance Industries has been under-performing the markets in the last two months even though the markets have remained stable. Any adverse movement in the share price of Reliance, which is an Index heavyweight, will have a negative impact on the overall market - more so because there are not many other shares with high weightage that can prop up the index.