Ambani's Reliance faces a rare January setback

Reliance Industries has had a rough start to the year, with a rare share-price slide in January and weaker-than-expected earnings, highlighting the pressures building across some of its key businesses.

What is the outlook for the stock of India's most valuable company? That's our focus this week. Write to us at ira.dugal@thomsonreuters.com.

And, India plans to open up the defence sector to larger foreign investment. Scroll down for that Reuters exclusive report.

Mukesh Ambani's Reliance, which has a market value of 19.12 trillion Indian rupees ($210.42 billion), has slumped about 10% so far in 2026, a rare early-year drop that has weighed on the benchmark Nifty 50, which is down roughly 2%. The last time the stock dropped more in any January was in 2011.

The fall, including a 3% decline after the company reported weaker-than-expected quarterly earnings, reflects complications in its refining business due to geopolitical tensions, intensifying competition in its retail operations, and investor caution ahead of the planned listing of its telecoms unit.

The company faces "headwinds" from loss of Russian crude in its export-focused refinery and higher freight costs in its core oil-to-chemicals business, Jefferies said in a January 16 note.

But it could potentially resume purchases of Venezuelan oil, defraying the loss of Russian barrels, the brokerage said.

Reliance cut imports of Russian oil by 32.4% in December, the lowest level since February 2024, under pressure from Western sanctions, data analysed by Reuters journalist Nidhi Verma showed. The company's Russian imports are likely to be low in January too. Click here for that story.

The company has said it is in talks with the U.S. to permit purchases of oil from Venezuela.

Despite these challenges, the business continues to report strong financials.

Factors working in its favour include strong volume growth and fuel cracks - the difference between the price of refined products and the crude used to produce them - Mumbai-based brokerage BOB Caps said.

Fuel retailing volumes via the Jio-BP joint venture are also expanding, it added.

Where the earnings disappointed most was in the retail business, Reliance Retail, which was dragged down by India's shifting consumer preferences.

Reliance Retail reported a 9% growth in net revenue, lower than the 13% for competitor Avenue Supermarts, and blamed this partly on a shift in festival dates and a demerger of its consumer products division.

Its margins also declined due to discounts offered in the festival season and investments made in quick commerce.

India's fast-changing consumer market has seen attention shift from traditional stores to online shopping and now quick commerce where deliveries within minutes have sparked opportunity and risks.

The company told analysts this business is already margin-positive as Reliance leverages its extensive store network to deliver electronics, fashion, and groceries, creating a unique omnichannel advantage.

The quick-commerce business, where Zomato, run by Eternal, Swiggy, and Walmart's Flipkart are big players, recently came under fire for promoting 10-minute deliveries that critics have argued put delivery staff at risk.

Read here to catch up on the controversy.

Jefferies analysts also red-flagged Reliance's fast-moving consumer goods business where too many brands may mean it is spreading itself "too thin".

While the retail business seems to be some distance away from a listing, the public offering of the telecoms unit Jio Platforms appears imminent.

The government has given the green light for a minimum float of 2.5% for a public listing, clearing the way for large IPOs including Jio's.

Despite the pressures, analysts still see upside to the Reliance Industries stock in 2026, with only 2 of 34 analysts on LSEG listing it as a sell. The median price target on the stock is 1,700 rupees, a 20% upside from current levels.

A ruling by India's top court in a tax case related to U.S. investment firm Tiger Global's sale of shares in Flipkart to Walmart in 2018 has spooked global investors who have poured $180 billion into India via the tax haven of Mauritius.

Read details of the judgement here and don't miss this analysis on its implications for investors.

The ruling comes at a time when India has seen a sharp drop in portfolio and strategic investments from overseas, a decline that the market regulator is trying to reverse through a series of steps.

India plans to make it much easier for foreign firms to invest in defence companies, Reuters journalists Nikunj Ohri and Sarita Chaganti Singh reported.

Foreign firms may be permitted to pick up 74% in Indian firms with government approval, and tough conditions related to technology transfers may be lifted.

Read the details here.

India and the United Arab Emirates agreed to double bilateral trade to $200 billion in six years and strengthen defence ties during talks between Prime Minister Narendra Modi and UAE President Sheikh Mohammed bin Zayed Al Nahyan held in New Delhi.

This newsletter was edited by Muralikumar Anantharaman, Editor, Global News Desk, in Singapore.