Options traders are the most bearish on Reliance Industries Ltd. (RIL) in two years as India’s biggest company by market value faces a decline in natural-gas production that may take two years to reverse. The ratio of outstanding puts to sell the shares versus calls to buy reached 1.43 yesterday, the highest open interest ratio since October 2009, data compiled by Bloomberg show. Reliance has dropped 21 percent this year, compared with a 16 percent slide in the benchmark BSE India Sensitive Index. The company, controlled by billionaire Mukesh Ambani, has been struggling to reverse a decline in gas production from the KG-D6 block, which has reduced supplies to power generators and fertilizer producers in Asia’s second-fastest growing major economy. Boosting output may take a couple of years, Sashi Mukundan, the head of BP Plc’s India unit, said Sept. 6. BP owns 30 percent of the reservoir. “Traders are buying protection as stocks may cool off on falling gas output,” said Yogesh Radke, analyst with Edelweiss Financial Services Ltd. in Mumbai. “An addition of 200,000 shares yesterday in the 780 rupees and 800 rupees strike shows negative momentum.” Reliance shares fell 1.6 percent to 838.6 rupees at 11:23 a.m. in Mumbai, ending three days of gains. The stock touched a 29-month low of 719.4 rupees on Aug. 26. Reliance last month briefly lost its position as India’s most valuable company. A call option gives investors the right to buy a security at a set price by a specific date. A put option gives the right to sell. Investors use options to guard against fluctuations in the prices of securities they own, speculate on share-price moves or bet that volatility will rise or fall. To contact the reporters on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net. To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net; Amit Prakash at aprakash1@bloomberg.net.

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