Reliance Industries 10 rupees away from $100 bln market cap, after TCS

Three months after Tata Consultancy Services became the first Indian company to achieve a market capitalization of $100 bln (Rs 6.85 lakh cr), Reliance Industries is close to the $100 bln mark as well.

At present, there are only around 100 companies in the world whose shares are worth $100 bln or more, including the likes of Facebook, Google and Apple.

LIQUIDITY

With major indices on the Indian capital markets at close to its all-time highs due to global liquidity, stocks like Reliance Industries too have made strong gains in the last four days.

The stock was trading at Rs 1,062, up 23 rupees, on the National Stock Exchange at 10:40 AM, only around Rs 10 short of the level required to take the overall market capitalization of the company to above $100 bln.

Market capitalization refers to the price of all the shares of the company taken together. In other words, it is the value of the equity of the company, or what you would have to pay to buy it.

BREAKOUT

Reliance Industries was, for a long time, the most valuable company in India, but the stock entered a long period of under-performance soon after the global financial crisis hit India in 2008.

Hit by declining crude prices and an overall correction in the stock markets, the company’s stock price fell from around Rs 782 (adjusted for stock splits) in early 2008 to Rs 255 in October that year.

It subsequently recovered to over Rs 590 over the next eight months, but then went on to disappoint investors remaining in the same range for close to around eight years.

However, the stock saw a clear break-out in February last year when it started becoming clear that its investment of billions of dollars in telecom and broadband was making it the strongest player in the sector, along with Bharti Airtel.

The stock has nearly doubled in the last 19 months, boosted by both global liquidity as well as clear signs that it was on the way to dominate the communication, media and entertainment sectors of the future.

Despite the gains, Reliance Industries continues to remain quite a distance away from TCS, which today has market capitalization of over $111 bln.