InvestorQ : Why did Reliance Industries correct so sharply in the markets and should I hold on to Reliance?
Priyanka Jain made post

Why did Reliance Industries correct so sharply in the markets and should I hold on to Reliance?

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Swati Naik answered.
3 years ago
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The sharp correction on Reliance Industries came on the back of Morgan Stanley downgrading the stock from “Over Weight” to “Equal Weight”. Basically, Morgan Stanley downgraded RIL because they expect that the gross refining margins (GRM) of the company will gradually fall to lower levels. Also, Morgan expects RIL to put more money into low margin investments going ahead and also feels that the benefits on price of the Reliance Jio launch were already factored in. This is the opinion of Morgan Stanley.

The bigger question is what should you do with your holdings in RIL? The stock is still one of the core stocks to own if you are looking at the India growth story. While ARPUs of the telecom business have come under some pressure in the past, the concerns may not be too high considering the market share that they have and the ARPU advantage that they have over Bharti Airtel and Vodafone Idea. While it is true that the stock has appreciated sharply in the last 18 months, you must at best look at booking partial profits in RIL. If you are looking at the India story, RIL should still be a key part of your portfolio.

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