Reliance Industries: Key Support Level To Watch As The Stock Enters Oversold Zone
Even after the weakness, it seems that now put-writing activity is there, says Motilal Oswal's Chandan Taparia.
Reliance Industries Ltd. moved into oversold territory for the first time since March after it fell for a fifth consecutive session on Monday.
In the last two months, there has been a correction from higher levels, Chandan Taparia, the head of technical and derivative research at Motilal Oswal Financial Services Ltd., told BQ Prime in an interview. In July, it had hit a high, and now it is hovering near Rs 2,350 apiece.
The stock witnessed a good run-up from the end of March till July. After that, it corrected of more than 33%, according to Taparia.
Chandan Taparia, head of technical & derivative research, Motilal Oswal Financial Services (Source: BQ Prime)
Because of a setup in daily and weekly charts, upside is capped, Taparia said. The stock is down by around 2.5%, and it is trading lower at its volume-weighted average, he said. "If you look at the daily chart ... it is now in oversold territory."
After the weakness, there seems to be now put-writing activity, and due to this, Rs 2,300 could be a support for the stock, Taparia said. "We don’t believe there will be big momentum, but with the support of Rs 2,300, Reliance Industries can at least bounce at Rs 2,420 levels."
"If an investor looks to buy at current levels, the first support will be at Rs 2,300, and the hurdle [resistance] will be around Rs 2,400–2,420," Taparia said.
Like the benchmark Nifty 50, Reliance Industries stock closed almost unchanged at Rs 2,340 apiece on the National Stock Exchange on Tuesday.
If the stock consolidates near to Rs 2,400–2,420, then only it will start the next leg of the rally, which can take it to the Rs 2,600 level, said Taparia.
Sushil Choksey, chief executive officer at Indus Equity Advisors, doesn't see why RIL cannot achieve Rs 1.75–1.8 lakh crore of Ebitda for the current financial year. Ebitda in FY23 was Rs 1.42 lakh crore.
"The growth path is led by new divisions of hydrogen and solar, which will start contributing in a small way in 2025, and 2026 will be the year where they will emerge as big winners because India is looking at green energy in a big way," Choksey said.
Sushil Choksey, chief executive officer at Indus Equity Advisors (Source: BQ Prime)
Reliance Industries is also looking attractive amid India's inclusion in JPMorgan Chase & Co.'s Emerging Market Bond Index, which would make most of the large corporate capex reasonably priced in terms of borrowing costs, according to Choksey.
He anticipates Reliance Jio to have a strong quarter, with cricket and movies leading the way. At the same time, the average revenue per user, which was around Rs 180, should be heading to Rs 190 by the end of the year.
"If you're asking me any further weakness from here, post Jio Financial's demerger, it seems to be an opportunity," he said. RIL's vision for green energy, Choksey said, would determine whether that division would add value to its current business.