Reliance Power Shares Hit Lower Circuit of 5% for the Second Day in a Row

For the second consecutive trading session, Reliance Power shares hit the lower circuit limit of 5%, reaching a day’s low of ₹36.56 on November 13, 2024. This followed a similar decline of about 5% on November 12, 2024, when the stock closed at ₹38.48. The ongoing downturn was primarily driven by regulatory actions from the Securities and Exchange Board of India (SEBI). 

The regulator barred Anil Ambani and 24 other individuals from participating in the securities market for five years due to their involvement in a major fund diversion scandal linked to Reliance Home Finance Ltd (RHFL). The news created a ripple effect across the market, resulting in a broader sell-off of shares tied to Ambani’s business empire.

SEBI’s Regulatory Actions

The root cause of the market turmoil lies in SEBI’s findings, which revealed that Ambani and his associates had orchestrated a fraudulent scheme to divert funds from RHFL. They disguised the funds as loans to companies connected to Ambani. As a result of this misconduct, SEBI imposed a hefty fine of ₹25 crore on Ambani and prohibited him from holding any directorial or managerial positions in listed companies for the duration of the ban. In addition, RHFL was banned from the securities market for six months and fined ₹6 lakh for its involvement in the scandal.

These regulatory actions have cast a shadow over the governance and financial integrity of Ambani’s companies, raising concerns among investors. In response to these developments, shares of Reliance Home Finance saw a sharp decline of 4.90%, closing at ₹4.46. Meanwhile, Reliance Infrastructure suffered an even steeper drop of 10.83%, ending the day at ₹209.90 on the Bombay Stock Exchange (BSE).

Market Response

The market response was swift and severe. Reliance Power shares hit their lower circuit limit of 5% on both the BSE and NSE, continuing a troubling downward trajectory for the company. This marks a continuation of the stock’s recent struggles, with its price falling significantly over the past several weeks amid growing investor concerns. In fact, Reliance Power’s stock has now dropped by approximately 14.25% over the past three days alone, highlighting the deepening market unease.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.