Is RIL shares underperformance a blip?

By Pratish Narayanan and Ami Shah

MUMBAI (Reuters) - Shares of India's biggest listed company Reliance Industries are down since mid-June, compared with the rising benchmark index, in an unusual occurrence for a firm seen as a bellwether for the stock market.

Investors have been worried about a gas-pricing dispute between the company, led by billionaire Mukesh Ambani, and Reliance Natural that is controlled by his estranged younger brother Anil. The dispute is being heard by the Supreme Court.

While an unfavourable ruling from a lower court in June has helped knock 11 percent of its market value to about $75 billion over the past five months, Reliance shares have jumped 15 percent over the past week on rumours of a settlement between the Ambani siblings even though the brothers have ruled out a patch-up.

Is the tide turning for investors in the refining, petrochemicals, and oil and gas exploration giant?

RIPE FOR TAKING PROFITS

Not so fast, according to R. K. Gupta, managing director of Taurus Mutual Fund.

"The stock has reached its peak, and is due for a correction," said Gupta, adding valuations looked very stretched and around 1,850 rupees to 1,900 rupees would be a fair price for the stock. Reliance shares closed at 2,100.20 rupees on Thursday. "It is time to book your profits in Reliance Industries."