This Mukesh Ambani Reliance share plummets 30% in weeks, investors caught in lower circuit trap

Since August 23, 2024, Reliance’s FMCG stock, Lotus Chocolate, has been trapped in a lower circuit, leaving investors feeling stuck. Every time the market opens, the lower circuit hits, freezing the stock in a downward spiral. What’s happening to this once-profitable stock?

Lotus Chocolate, acquired by Reliance Industries in May 2023, was once the talk of the stock market. Its shares skyrocketed from Rs 176 to Rs 2,608.65 within just 15 months, delivering a staggering 443.65% return in the past six months alone. However, what seemed like a dream investment quickly turned sour. By September 3, 2024, the stock price plummeted more than 30% from its August 23 peak of Rs 2484, falling to Rs 1,735. This sharp decline has left investors alarmed.

While the stock recovered slightly on September 4 and 5, the relief was short-lived. On September 6, Lotus Chocolate hit a 5% lower circuit again, closing at Rs 1,766.05. The continuous downward spiral, combined with the daily lower circuit, has left shareholders unable to sell their holdings, as the market blocks transactions with the circuit in place.

Reliance’s acquisition initially spurred a buying frenzy, with the stock hitting upper circuits for 27 consecutive trading sessions. But now, the tables have turned. Since late August, the stock has been stuck in a lower circuit for eight out of ten trading days, leaving many questioning if the company’s momentum has come to a sudden halt.

With investors unable to offload their shares, the once-glittering opportunity now feels like a trap.