Reliance Industries Ltd (RIL) is poised to outperform the Nifty index, according to a recent technical analysis by JM Financial. This assessment comes ahead of the company's scheduled meeting on September 5 to discuss the issuance of bonus shares. For investors looking to buy shares online, this announcement could be a pivotal moment.
Technical outlook suggests bullish trend
JM Financial's analysis highlights a bullish trend for RIL's stock. Despite a previous decline from its peak of Rs 3,218, the stock has been exhibiting a pattern of higher tops and higher bottoms. This formation, known for its positive implications, indicates a potential upward trajectory. Additionally, RIL's stock is currently trading above all its significant long-term and short-term exponential moving averages (EMAs), further reinforcing the bullish outlook.
Recent trading activity and market sentiment
In recent months, significant selling activity in RIL's stock has occurred just below the 100-day EMA, which is presently at Rs 2,958. As of Tuesday, the stock was trading relatively flat at Rs 3,033. The September futures and options series started with a notable open interest of 48.7 million shares, surpassing the average of 40 million shares observed in the previous three series. This accumulation, predominantly on the long side, reflects the prevailing bullish sentiment in the market.
Performance comparison and fund positioning
Quarter-to-date, Reliance Industries' shares have lagged behind the Nifty index by approximately 8 per cent. Furthermore, mutual funds appear to be underweight on RIL compared to its NSE200 weight. JM Financial notes that the ratio of Reliance to Nifty (currently at 0.1205) is nearing post-COVID-19 lows.
Historically, this ratio has found support in the range of 0.1159-0.12 over the past four years, suggesting a reduced likelihood of a significant breakdown. Currently, the ratio is trading at 0.8 standard deviations below the mean of 0.1294, placing it in the 15th percentile.
Upcoming developments and investor expectations
RIL's stock has garnered attention recently following the announcement at its 47th annual general meeting (AGM). The company disclosed that its board would convene on September 5 to consider a proposal for issuing bonus shares at a ratio of 1:1. For those interested in buying shares online, this could be an ideal opportunity to participate in RIL’s growth.
While the AGM did not reveal plans to monetise Reliance Jio Infocomm and Reliance Retail Ventures Ltd, it did present a compelling roadmap for its new energy business. This strategic direction has resonated positively with analysts and investors alike. For those looking to buy shares online, keeping an eye on RIL’s performance could offer lucrative opportunities.
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