Reliance Industries Share Price - What should investors do ahead?

5 Mar 2026 , 06:25 PM

Summary 

Reliance Industries shares rebounded after a short-term correction as investors turned optimistic about rising diesel refining margins. Diesel crack spreads have surged recently, improving profitability for refiners such as Reliance, which operates the world’s largest refinery at Jamnagar.

Shares of Reliance Industries closed in at ₹1,389.70, 3.28% up on March 5, 2026, as investors stepped in to buy the stock after a short-term correction. The stock had fallen roughly 4.26% over the previous three trading sessions, largely due to rising geopolitical tensions in the Middle East that unsettled global markets.

But many investors now believe the recent dip may have created an opportunity. There are several reasons why optimism around Reliance is building again.

The Advantage of Refining Business

One of the biggest reasons investors are optimistic is the company’s refining business.

At first glance, rising crude oil prices might seem negative for companies. But for refiners like Reliance, the story is a bit different.

Refineries buy crude oil and convert it into products such as: Petrol, Diesel, Jet Fuel, Petrochemicals, etc. The profit for refining companies like Reliance Industries is the difference between the price of these refined fuels and the price of crude oil. This difference is called the refining margin, often referred to as the “crack spread.”

A simple way to understand this is to think of a bakery. The bakery buys flour and turns it into bread and cakes. If the price of bread rises faster than the price of flour, the bakery makes more money on every loaf sold. The same principle applies to refineries. If the price of Diesel rises faster than the price of Crude Oil, the refineries make more money.

Recently, these ‘crack spread’ have expanded sharply. Diesel refining margins have jumped from around $20 per barrel earlier to roughly $35–$42 per barrel. This matters because Diesel forms a large part of Reliance’s refinery output. When diesel prices rise much faster than crude oil, the refinery earns more profit per barrel processed. And Reliance Industries Ltd. reported an EBITDA of ~₹54,988 crore alone from its O2C Business segment, of which Diesel contributes to ~40%! Adding to this – Reliance operates the world’s largest refinery located at Jamnagar, Gujarat. Since diesel forms a large part of the output, higher diesel margins can significantly boost the company’s profits and operating earnings.

Income beyond Fuels

Beyond fuels, Reliance produces petrochemicals used to make plastics, polymers, and industrial materials. Here too, the company benefits from flexibility. Instead of relying only on crude oil, Reliance uses multiple feedstocks such as ethane and propane. This diversified input mix helps the company maintain healthier margins even when crude prices fluctuate. If petrochemical spreads improve, this segment can further support profits.

The Cherry on the Top

Also investors are partially bullish on Reliance Industries because of two potential catalysts. The first is the possible initial public offering (IPO) of Reliance Jio, the company’s telecom arm. This listing could unlock value for shareholders and highlight the scale of Reliance’s digital business.

And the second is the possibility of telecom tariff hikes. If tariffs rise after a potential listing, Jio’s profitability could improve further.

Together, these developments could act as additional triggers for the stock.

However, the outlook is not entirely risk-free.

Risks

First and foremost – it is to be noted that the refining business is highly cyclical. Margins tend to rise when demand is strong or supply is tight, but they can fall just as quickly when conditions normalise. Any change in the geopolitical situation can disrupt the supply as well as demand. This is why, it is also important that investors – such as yourself should blend in fundamentals with technical indicators to time your investments in the stock market.

Secondly, if refining margins become extremely high, the government may intervene through windfall taxes. A windfall tax is a temporary tax imposed when companies earn unusually high profits because of external events such as wars, supply shortages or commodity price spikes.

India introduced such a tax in July 2022 during the Russia–Ukraine war, when oil prices surged and refiners were earning extraordinary profits. The tax was eventually scrapped in December 2024 after oil prices cooled. If diesel margins remain elevated for a prolonged period, similar policy action cannot be ruled out.

Takeaways

For now, it seems that shares of Reliance Industries Ltd. have caught the attention of analysts and investors alike. After witnessing declines over the past three trading sessions, optimism appears to be returning to the stock.

However, before making any investment decision, it is important to understand your own risk appetite, the capital you are willing to deploy, and the potential returns you expect. Investing without a clear plan can be risky – much like jumping into a swimming pool simply because the water does not appear deep.

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