Short Summary: Reliance Industries shares plunged nearly 5.5% today after the company denied reports about Russian crude oil imports. The clarification has spooked investors worried about profit margins, as RIL heavily relied on discounted Russian oil. Here’s what every investor needs to know about this sudden fall and what comes next.
The Shock That Rattled Markets Today
Reliance Industries Limited (RIL), India’s most valuable company, saw its shares nosedive by 5.5% in intraday trading today—wiping out billions in market value within hours. Just yesterday, the stock was making fresh highs near ₹1,612. So what changed overnight?
The answer lies in three words: Russian oil denial.
What Reliance Just Announced
RIL issued a clarification statement denying Bloomberg’s report about incoming Russian crude shipments. The company clearly stated:
- No Russian crude oil has arrived at Jamnagar refinery in the last 3 weeks
- No imports expected from Russia in January 2025
- The Bloomberg report citing analytics firm Keplr about 2.2 million barrels was “baseless”
This denial sent shockwaves because Russian oil had become RIL’s secret profit weapon.
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Why Russian Oil Mattered So Much
Between 2021 and 2024, Reliance transformed its crude sourcing strategy. Here are the stunning numbers:
- 2021: Only 3% Russian crude in the mix
- 2024: Jumped to nearly 50% of Jamnagar refinery’s requirements
- Discount advantage: $19-25 per barrel cheaper than Brent crude
RIL had secured a long-term deal with Russian oil company Rosneft for 5 lakh barrels per day—giving them a massive cost advantage over competitors.
The Profit Margin Problem
When you buy oil at a huge discount, your refining margins soar. RIL’s Gross Refining Margin (GRM) benefited enormously from cheap Russian crude.
The market’s fear today: If Russian oil stops completely, GRM will compress, directly hitting profitability and future earnings.
India’s overall Russian oil imports have already crashed 40%—from 20 lakh barrels per day in June to just 12 lakh barrels in December (a 3-year low). This reflects growing pressure from US and European sanctions.
What Brokerages Are Saying
Despite today’s fall, major brokerages remain bullish:
- Morgan Stanley: Overweight, Target ₹1,847
- UBS: Buy, Target ₹1,820
- Jefferies: Buy, Target ₹1,785
- JP Morgan: Overweight, Target ₹1,727
Important note: These reports were issued before yesterday’s denial statement.
The Venezuela Silver Lining
Jefferies highlighted a potential positive: increased US involvement in Venezuela could boost oil supply. RIL has supply agreements with Venezuelan oil companies, which might partially offset Russian crude losses.
However, this benefit remains speculative and long-term.
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Technical View: Opportunity or Trap?
Market expert Harish Jujare from Prithvi Films suggests this could be a buying opportunity on dips. His reasoning:
- No major technical breakdown visible
- Stock remains near support levels
- All-time high of ₹1,610 still in sight
- Momentum structure intact
His advice: Long-term holders should stay invested; fresh investors can accumulate on further dips.
5 Key Takeaways for Investors
- The denial is real: RIL has officially stopped Russian crude imports for now
- Margin impact ahead: Watch Q4 results closely for GRM compression signals
- Sanctions pressure: US-Europe restrictions are forcing Indian refiners to diversify
- Analyst confidence remains: Despite today’s fall, target prices suggest 15-20% upside
- Technical support holding: The stock hasn’t broken key support levels yet
What Should You Do Now?
This isn’t a fundamental collapse—it’s a business model adjustment. RIL’s denial removes uncertainty but confirms margin pressure ahead.
For existing investors: Hold if your investment horizon is 1+ years. The stock remains fundamentally strong with telecom and retail businesses growing.
For new investors: Watch the ₹1,480-1,500 zone. A bounce from here with volume could offer entry opportunity.
Red flag scenario: If Russian oil ban becomes permanent and no alternative cheap crude source emerges, expect 2-3 quarters of margin pressure.
The Bottom Line: Today’s fall is about profit margin anxiety, not company failure. RIL is adapting to new geopolitical realities. The question isn’t if they’ll survive—it’s how quickly they’ll find new cost advantages. Smart money waits for clarity; panicked money sells today.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Please consult with a SEBI-registered financial advisor before making investment decisions. Stock market investments are subject to market risks.
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