Reliance share price lags behind Nifty 50 over the past year: Is it time to go long? | Stock Market News

Reliance share price: Shares of India’s largest company by market capitalisation, Reliance Industries, have underperformed the Nifty 50 over the past year. While Reliance’s stock has gained 7 per cent, the Nifty 50 has delivered a significant 19 per cent return during the same period. However, experts believe Reliance could be poised for a turnaround, citing emerging value in its new energy business as a key growth driver.

Reliance share price trend

The heavyweight stock has underperformed in recent months. After hitting a 52-week high of ₹1,608.80 on July 8 this year, it has faced consistent profit booking.

On a monthly basis, the stock fell 4 per cent in July, followed by a modest 0.3 per cent gain in August. However, it resumed its downward trend in September, declining 2 per cent, followed by a sharp 10 per cent drop in October. So far in November, it is down another 5 per cent.

The fall in the stock could be attributed to the company’s declining profit and profit margin.

For the September quarter of the current financial year, the company reported a 3.6 per cent year-on-year (YoY) decline in its Q2FY25 consolidated net profit to ₹19,101 crore from ₹19,820 crore in the corresponding quarter a year ago.

The company reported a 2 per cent YoY decline in EBITDA to ₹43,934 crore, while the EBITDA margin shrank by 50 bps to 17 per cent.

What should investors do?

Experts find this stock buy-worthy for the long term. Global brokerage firm CLSA recently maintained its ‘outperform’ rating on the stock with a target price of ₹1,650. CLSA’s bullish stance is based on its belief that the market is ignoring Reliance’s new energy business worth $40 billion.

However, the brokerage cited potential negative triggers such as delay in the start of new energy projects, extension of low growth for Reliance Retail beyond 2-3 quarters, and lack of proof of monetisation of its 5G capex.

Let’s take a look at what experts have to say about the stock:

Fundamental views

Atul Parakh, CEO of Bigul

Reliance Industries has recently made recent advancements in its new renewable energy venture with an innovative strategy.

Reliance is now looking forward to an exciting journey of developing a gigantic 20GW solar Gigafactory, where cell-to-module production will begin in the coming months.

This is a time of surpassing significance because India intends to increase its solar capacity from 91GW to an ambitious 280GW by 2030.

Reliance is committed to green energy as it aims to make this new venture as huge as its substantial business in oil-to-chemicals within five to seven years.

“One can refer to this transition from a giant energy company to a forward-looking group as evidence of its adaptability and vision for a sustainable future,” said Parakh.

Technical views

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers

Reliance has been following a textbook Elliott Wave 5-wave structure on the daily chart since March 2023. This impulsive rally came to a decisive conclusion in July 2024, marking the end of the fifth wave and initiating a corrective ABC phase.

Such corrections are typical after the completion of a 5-wave cycle and often retrace to significant Fibonacci levels.

Currently, the ongoing correction appears to be approaching a critical support zone in the ₹1,220-1,240 range, aligning with the 61.8 per cent Fibonacci retracement level of the entire 5-wave structure.

This level is important as it typically serves as a strong support during corrective phases, indicating the potential for base formation. Moreover, these levels coincide with the completion of a bullish Crab harmonic pattern, further strengthening the case for a reversal.

“Given this confluence of technical indicators, traders can consider initiating long positions in the ₹1,220-1,230 range, placing a protective stop loss below ₹1,175 to manage risk. The anticipated upside target for this trade is around ₹1,360, offering a favourable risk-to-reward ratio as the stock is poised to resume its upward trajectory following the correction,” said Patel.

Mandar Bhojane, Equity Research Analyst, Choice Broking

Reliance Industries reflects a bearish trend characterized by a pattern of lower highs and lower lows, indicating sustained selling pressure.

This downtrend is likely to persist until the stock approaches a key support zone between ₹1,240 and ₹1,200. This zone could provide a potential buying opportunity if clear reversal signals emerge.

The stock is trading below its 200-day Exponential Moving Average (EMA), which reinforces the ongoing bearish sentiment.

Additionally, the Relative Strength Index (RSI) stands at 28.63, signalling oversold conditions. This suggests that the selling momentum might be overextended, increasing the probability of a short-term reversal or an upward bounce.

“If Reliance holds above ₹1,285 and demonstrates a reversal pattern, it may present an attractive buying opportunity for investors. A long position can be considered with a target range of ₹1,355 to ₹1,400. To effectively manage risk, placing a stop-loss at ₹1,197 is advisable to safeguard against further downside,” said Bhojane.

“Investors should monitor price action closely near the support and resistance levels and confirm reversal patterns before entering any positions,” Bhojane said.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.